The UK regulator has come under fire from the chief executive of the Association of Financial Mutuals, who has issued a thoroughgoing critique of the Financial Services Authority’s Retail Distribution Review package of reforms.

Prime among Martin Shaw's criticisms is that many of the regulator's new rules concerning investment advice remain unpublished. This means that advisors face a race to become RDR-compliant and under this and other kinds of regulatory pressure, some providers may be forced to withdraw products from the market.

As a result, Shaw warns, this would mean that consumers would find it increasingly hard to find the investment products they need – an outcome which goes directly against the RDR’s aims of making reliable investment advice and a whole range products available to all those who need it.

The RDR is due to come into force at the end of 2012, but according to Shaw this timeframe may be too ambitious since many IFAs will have to completely revise their business models, such as moving to a fee-only based structure.

“In order to be successful the FSA firstly needs to reassess its priorities, with more attention given to ensuring that it achieves good outcomes for the generality of consumers, and the implementation deadline must either be delayed or phased in over a more appropriate timetable," said Shaw.

While the RDR’s aims of improving the standard and availability of financial advice are certainly to be lauded, the reform package has also been the subject of fierce criticism on a number of fronts. One particularly contentious issue is the future labelling of advisors as “restricted” or “independent”, with those wishing to be designated as independent having to demonstrate a “whole of market” approach which may involve advisors having to consider investments such as structured products which they might not feel entirely comfortable with. 

Industry commentators have also predicted that the RDR will lead to up to 15 per cent, or possibly more, IFAs going out of business due to rising costs, and this will further squeeze available financial advice to the public at a time when financial affairs grow ever more complex.