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🏦 '''Retail Distribution Review (RDR)''' is a landmark regulatory reform, originally introduced by the United Kingdom's [[Definition:Financial Services Authority (FSA) | Financial Services Authority]] (FSA) and subsequently maintained by the [[Definition:Financial Conduct Authority (FCA) | Financial Conduct Authority]] (FCA), that fundamentally reshaped how [[Definition:Financial adviser | financial advisers]] and [[Definition:Insurance intermediary | insurance intermediaries]] are remunerated and classified when distributing [[Definition:Life insurance | life insurance]], [[Definition:Pension | pension]], and [[Definition:Investment | investment]] products to retail consumers. Implemented at the end of 2012, the RDR banned [[Definition:Commission | commission]]-based remuneration for investment advice and required advisers to charge explicit fees, while also raising minimum qualification standards and mandating that firms clearly disclose whether they offer independent or restricted advice.

⚙️ Before the RDR, commission payments from [[Definition:Insurance carrier | insurers]] and product manufacturers to distributors created well-documented conflicts of interest: advisers had financial incentives to recommend products that paid higher commissions rather than those best suited to the client. The RDR dismantled this structure by requiring that advisory fees be agreed directly with the consumer, making the cost of advice transparent for the first time. Advisers were further required to classify themselves as "independent" — meaning they consider the whole market — or "restricted" to a narrower range of products or providers. These changes triggered significant consolidation among advisory firms, as smaller practices struggled to adapt to fee-based models, and accelerated the growth of [[Definition:Platform | platform]]-based distribution in the UK life and pensions market. The reform's scope primarily covered [[Definition:Investment product | investment]] and pension products, including investment-linked life insurance, though pure [[Definition:Protection insurance | protection]] products such as [[Definition:Term life insurance | term life]] remained largely commission-based.

💡 The RDR's influence extends well beyond the United Kingdom. Regulators in Australia, the Netherlands, India, South Africa, and Singapore have adopted or considered analogous commission restrictions and transparency requirements for insurance and investment distribution, often citing the UK experience as a model. For the global insurance industry, the RDR represents a turning point in the ongoing tension between manufacturer-funded distribution and consumer-aligned advice. It reshaped the economics of [[Definition:Insurance distribution | insurance distribution]], accelerated [[Definition:Insurtech | insurtech]] innovation in direct-to-consumer and robo-advice models, and elevated professional standards among intermediaries. Insurers and [[Definition:Insurance group | insurance groups]] operating across multiple markets must now navigate a patchwork of commission rules — some jurisdictions permit commissions with disclosure, others cap them, and still others ban them outright — making the RDR a foundational reference point for any distribution strategy targeting retail policyholders.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Insurance Distribution Directive (IDD)]]
* [[Definition:Commission]]
* [[Definition:Financial Conduct Authority (FCA)]]
* [[Definition:Insurance intermediary]]
* [[Definition:Conduct risk]]
* [[Definition:Duty of care]]
{{Div col end}}

Definition:Retail Distribution Review (RDR) - Revision history

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