Following today’s FCA consultation into a new simplified advice regime a selection of industry experts have commented.
Alastair Black, Head of Industry Change at abrdn said: “This is a welcome consultation. We need to get behind this and ensure it delivers a practical solution making advice more accessible to more people, ultimately helping to shrink the advice gap.
“Advisers want to be able to offer accessible, affordable advice to match clients’ wide range of needs. And clients don’t always want, or even require, a full review, which can be costly to both deliver and buy. In some cases, clients also want advisers to be able to help their children, who have much simpler, limited needs, but can’t currently get the support they need without going ‘all in’.
“Opening up a middle ground of simplified, cost-effective advice that still adheres to the principles of Consumer Duty will be a win-win for savers, investors and advisers alike. As well as helping more people who need advice access it, it will allow advisers to extend their expertise across generations. This will ultimately engender greater financial resilience and wellbeing across the population, and broaden advisers’ client bases.”
Doug Brown, Aviva CEO of UK and Ireland Life Brown said:“We welcome today’s announcement from the FCA. With an uncertain economic backdrop and consumers facing increasingly complex financial decisions, it is more important than ever that people can access the support they need to manage their money effectively and make well-informed decisions about funding their retirement. Proportionate, affordable, financial advice can be a critical part of this. We look forward to engaging with the FCA to ensure that the new framework provides the support UK consumers need.”
Steven Cameron, Pensions Director at Aegon, comments: “The latest FCA Consultation on ‘Broadening access to financial advice for mainstream investments’ is welcome recognition that something needs to change to address the support gap the current ‘regulated advice’ definition creates. The focus at this stage is relatively narrow – supporting individuals who might benefit from investing their ‘excess cash’ savings into a stocks and shares ISA. Financial adviser firms are likely to have more interest in the promised holistic review of the advice / guidance boundary which could open up a far wider range of new services to a broader range of customers.
“We also hope the FCA will consider these proposals alongside the concept of more personalised financial guidance, as tabled by Harriet Harman MP.
“The consultation, originally expected at the start of 2022, comes after an interesting year for assessing the relative attractions of cash versus stocks and shares. It’s hard to predict where interest rates, stock markets and inflation will be by the time this regime goes live.
“These proposals also need assessed through the extra lens of the new Consumer Duty, which receives 36 mentions within the consultation. Any firm considering introducing the new service will want to be absolutely sure it will deliver good outcomes and avoid foreseeable harm. With a maximum investment of £20,000, the cost of simplified advice whether or not spread, will be a major consideration when assessing value. There is also a big question over how to provide ongoing support for those who through investment growth or year-on-year investments exceed the £20k limit, excluding themselves from the new simplified advice service in future.”
Prakash Chandramohan, Strategy Director at TISA, said: “We welcome the FCA’s efforts to open up more mass market support for consumers. Helping people with more affordable advice and personalised guidance will allow them to make informed decisions that best serve their interests and to make the most of their savings.
“The FCA has been constrained though the legislative framework, which means the proposals will not solve the consumer disengagement problem that lies at the heart of this issue.
“Simplified advice needs legislative change and to sit alongside Harriett Baldwin MP’s tabled amendment to the Financial Services and Markets Bill or similar, legislative solutions. In these economically turbulent times, consumers need focused and effective help from financial services providers, and only a concerted, combined regulatory and legislative effort can deliver on it.
“At TISA, we are pleased with initiatives like Harriett Baldwin MP’s that are prompting the Government to look at solutions for consumers. Government has the opportunity in the next few years to put in place the right foundations to help consumers rebuild their financial resilience for when this crisis is over. We are ready to work with them to achieve that.”
Jonathan Lipkin, Director of Policy, Strategy and Innovation of the Investment Association, said: “The opportunity to invest for the future should be available to millions more British people. We’ve been advocating to make it easier to access affordable financial products and services and today’s FCA announcement on financial advice is an important step in the right direction. We look forward to working with the regulator and other stakeholders on a holistic review of advice that ensures consumers feel empowered, while still offering high levels of protection.”
Simon Harrington Head of Public Affairs commented: “We welcome this proposal from the Financial Conduct Authority (FCA). PIMFA has long been an advocate of a simplified advice regime – setting out our own proposals for such a regime in a policy paper published earlier this year – and while we think that there are areas where these proposals could be extended upon, they represent a significant building block in providing individuals with a safe way to save and invest.
“Financial advice is an extremely important tool in helping people to adequately understand the options which are available to them, delivered by an individual who is appropriately qualified and, most importantly, not commercially incentivised to sell them products which are not in their own personal interest.
“These proposals provide consumers with a first step on the ladder towards accumulating wealth in an efficient manner and should build broader individual confidence in the saving and investment market and the financial advice profession more broadly. We look forward to engaging positively with these proposals.”