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Skandia: RDR will reduce cost of PI

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Skandia: RDR will reduce cost of PI

The retail distribution review (RDR) will significantly reduce the cost of professional indemnity (PI) insurance, according to Skandia.

Speaking at a Marketforce conference on the future of distribution, Skandia marketing director Nick Dixon said RDR would result in a better financial services industry, with well-run firms set for lower PI premiums and other regulatory dividends.

'With RDR the industry should become a cleaner place...it will reduce inherent risk and bring PI costs down,’ he said. ‘We might also see regulatory dividends for advisers that are well run and low risk.'

Dixon said PI premiums would not be the only thing to fall as a result of the RDR.

He said the greater transparency bought about the RDR would squeeze fund manager prices and platform charges to fall.

He added that falling prices for other parts of the value change would also eventually cause lower advice fees.

'Advisers are in the more resilient position but they are not immune. If everyone else's fees come down to around 30 basis points (bps) it will be hard for them to justify 100 bps.'

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