PIMFA has welcomed the Financial Conduct Authority’s (FCA) consultation on broadening access to investment through the provision of core investment advice.
PIMFA, which has previously set out proposals of its own for a Simplified Advice regime, broadly supports the FCA’s core investment advice proposals and is committed to the success of the proposals. But it remains concerned about the commercial viability of the proposals as currently envisaged.
The decision to place a lifetime limit on the amount an individual could contribute and the proposed restriction on transfer amounts into a stocks and shares ISA are, PIMFA believes, unnecessary and should be removed.
Simon Harrington, Head of Public Affairs at PIMFA commented: “The FCA’s proposals are well intentioned and largely strike the right balance between removing some of the barriers to accessing advice and maintaining the value of supporting individuals to make the right decision, or at least one which is broadly appropriate to their circumstances.
“While we are committed to making these proposals work, we do have concerns about their commercial viability, which are largely a result of what we consider to be the unnecessary restrictions that have been placed on the regime. Of concern to us are the lifetime limit of contributions at £20,000 and the ban on transfers in.
“We understand the reasons behind these restrictions – namely a desire to ensure that this service remains transactional – but this ceiling restricts the ability of firms to make what the FCA is proposing a commercially profitable service for firms to offer.
“More broadly, it speaks to a wider concern that we have around these proposals: that it acts as a means to sell ISAs, rather than acting as a service that allows individuals to build wealth with some professional support over the long term.
“These criticisms are not insurmountable in our view. The proposals are welcome but run the very real risk of being undermined by their design. To give them their best chance to succeed, the FCA must review the £20,000 limit and transfer ban as a matter of priority.”
