Martin Wheatley, the former CEO of Hong Kong’s Securities and Futures Commission, and now the the CEO of the UK’s Financial Conduct Authority, has announced that the regulatory overhaul known as RDR (Retail Distribution Review) has been successful in stamping out consumer exploitation.
RDR banned commissions (secret kickbacks) and gave a legal definition to the term “Independent Financial Adviser”, thus preventing insurance salesmen from misleading consumers about the nature of the “services” they were providing.
According to Wheatley, “We have seen a reduction in product bias, with a very noticeable decline in the sales of those products that before RDR came with higher commission”.
The Financial Times reports that sales of unit-linked and with-profit “insurance” products have fallen, while sales of low-cost index funds—which have never paid commissions—have risen.
The Financial Times also states that:
“Increasing numbers of investors are adopting a do-it-yourself approach, according to several surveys, particularly those at the less affluent end of the market. Increasing price competition among direct-to-consumer platforms also means that consumers are able to get better deals when managing their own investments online, the watchdog found.”
It Works in the UK, and It Will Work in Hong Kong
Anyone who reads this blog knows that Hong Kong is very badly in need of its own RDR. Hong Kongers have been screwed far worse than consumers in the UK. The insurance industry here has never been regulated, and the legal system is designed to obstruct ripped off consumers from seeking justice through the legal system. Class action lawsuits and contingent legal fees are forbidden.
Thousands of Hong Kongers camped out in the streets for 75 consecutive days because they are hungry for a government that responds more to the needs of society at large and less to the desires of local tycoons and foreign corporations.
It is time for change.