The long awaited FAMR recommendations are out today and industry reactions are coming into the IFA Magazine office.

Close Brothers Asset Management

Head of Advice Andy Cumming (pictured above) said: “Given the amount of consultations likely to emerge from the FAMR, it’s tempting to see the review as a lot of sound and fury, signifying nothing in the short term. However the FAMR has set a platform for meaningful changes to improve access to personal advice and appropriate guidance. For instance, a clearer delineation between guidance and advice will ultimately benefit the end consumer, reducing the level of confusion over what constitutes advice, and potentially allow the provision of more detailed guidance to the mass market. Any move that helps boost financial education and planning among prospective retirees is to be welcomed.

“Equally, the recommendation to allow part of a pension to be accessed prior to retirement to fund advice will pay dividends in the long-term. Retirement is not just a one-off decision; it requires careful planning to secure the best outcome. Taking early financial advice well ahead of the point of leaving the workforce will mean an individual will be able to evaluate whether their current savings and investment strategy match their long-term goals, or whether they need to up the ante on their contributions – before they consider what approach is best for accessing their accumulated savings at retirement.”


Aegon UK

Pensions Director Steven Cameron said: “We welcome the recommendation that ‘advice’ is redefined to cover only those services which include a personal recommendation. This is a first step towards addressing the widespread customer confusion around the differences between advice, personal recommendations and guidance. Consumers currently find it difficult to distinguish between the boundaries and benefits of a personal recommendation compared to guidance.

“But as well as regulatory definitions, we need to develop clear, intuitive communications that truly resonate with customers, rather than compliance technicians. This will help differentiate between advice and other guidance services that stop short of recommending a particular course of action. For example, advice might be described as a recommendation being made ‘for me’ whereas guidance might be framed as discussing options ‘with me’, leaving the final decision to the customer.

“It’s also important to make clear where personal responsibility lies under each approach, and what protections the customer has if things go wrong. Clear customer explanations will help individuals choose which support option they need and will also help highlight the value of professional advice with a personal recommendation.


“The renewed focus on streamlined advice is also welcome. Many individuals do not want full holistic advice across all of their needs and fuller recognition of a ‘streamlined’ or ‘focussed’ advice service on a particular need will allow unnecessary costs to be removed, making this option more cost-effective for advisers to offer and more attractive to a wider range of consumers.

“While many individuals will continue to want some human engagement, an openness by the FCA to allow the industry to innovate around digital guidance creates opportunities to reach far more customers. This, alongside looking at the workplace as a means of delivering support are positive steps forward to helping close parts of the ‘advice gap’.

“Aegon is a strong supporter of the benefits a ‘pensions dashboard’ would bring, allowing individuals to see information on all of their pensions in a single place, using digital technology. We are pleased the report recognises the role the Treasury can play in championing this industry initiative.”


Pensions and Lifetime Savings Association

Director of External Affairs Graham Vidler said: “The context for this report is important, coming as it does after the first wave of savers have made use of the relatively new pension freedoms. Our research1 shows that ‘Freedom & Choice’ has left many savers fearful and confused about making the right decisions with their pension savings in order to provide an income throughout their retirement. It also shows that advice is part, but only part, of the solution given that there is significant resistance among savers to seek financial advice. The root cause of this reluctance seems to be a combination of cost and accessibility and the review is right to focus on these two issues, as well as clarifying the regulatory boundary between guidance and advice.

“This report outlines some ways in which employers might be able to help without causing themselves regulatory risk – for example signposting savers to their own employer scheme offering retirement income products. But it is important to remember that not all employers will have the desire or resources to offer such products within their scheme. What’s really needed is a regulatory regime in which trustees and providers of workplace pensions can confidently signpost savers towards good value, independently-assessed products – either in or out of their own scheme.

“FAMR’s calls for greater affordability and accessibility are welcome but we struggle to see this becoming a reality in the near future, even if savers are allowed to access their pension pots early to pay for advice – the cost of which still represents a big proportion of the average pension pot. An alternative approach is needed to support the great majority of savers who will continue to be excluded from financial advice, particularly when it comes to making decisions about their retirement incomes.”


Pinset Masons

Legal Director in the Insurance team Tobin Ashby said: “The report by the Financial Advice Market Review has produced a long list of recommendations that could have a significant impact on the savings and investment industry.  In proposing a consultation by HMT on the definition of regulated advice under the Regulated Activities Order, FAMR has opened the door to a potential change that severely restricted the previous review of advice.  The report provides a clear steer towards converging regulated advice in the UK with the “personal recommendation” concept used in EU laws.  This is a logical step that could go a long way to providing the clarity for firms that the report acknowledges is currently missing.  It is combined with proposed FCA consultations for further guidance on streamlined advice and the suggestion of nudges and “rules of thumb” for guidance.  In acknowledging what has arguably been a key success of the Retail Distribution Review the report has however, in a significant single paragraph, ruled out a return to commission-based financial advice.

“Taking the recommendations together, this report does seem capable of ultimately producing the kind of framework needed to support consumers with simple requirements making important financial decisions.  HMT and the FCA, working with the new Financial Advice Working Group, have an important 12 months ahead before they must formally report back to the Economic Secretary and FCA Board on progress.”


Director General Chris Hannant said: “We welcome and support the review’s analysis of the problem of ensuring more widespread access to financial advice.  However, more could be done and the conclusions represent a missed opportunity.  While many of the proposals will be helpful, concrete measures beyond further clarification and guidance are needed.  In that sense, the review of FSCS funding is a substantive and positive step in the right direction.  It is essential that the government closely monitors access.  APFA will continue to work with FCA and Treasury, but I expect we will need to revisit the debate about access in the near future as I think further steps need be taken.”


Hargreaves Lansdown

Head of Retirement Policy Tom McPhail said: “Our initial analysis is that The FCA and the Treasury have done an excellent job of deconstructing the myriad ways in which the investment industry has become unable to serve all its potential customers effectively.

“For many, it had become an increasingly dysfunctional system with providers withdrawing from the market and consumers not getting access to the services they required.

“The most critical proposal is to simplify and clarify the boundary between advice and guidance; it should allow firms more latitude to deliver useful guidance without having to charge an advisory fee or worry about inadvertently straying into giving personalised advice.


“Overall this is good news for investors; over time they should find the investment industry more accessible. The development of clearer, simpler engagement, through the Dashboard, the Pension Passport, rules of thumb and with shorter suitability reports, will all help to reinvigorate consumers’ experience of dealing with the industry.

“We’re less convinced about extending the development process for advisers and the notion of ‘streamlined’ advice. Where regulated advice is given it should adhere to high standards; there is a risk that these proposals could undermine this extremely important principle and allow poor practices to creep back into the industry.

“The proposals to improve the transparency of FOS rulings and decision making should give firms greater clarity and comfort and reduce the risk of unexpected judgements being made against them in the future.”


Head of Employee Benefits Elliott Silk said: “Nearly one in five non-retirees in their 60s say they can’t afford a financial adviser, so it’s pretty unequivocal that the cost of financial advice is a barrier for some. Thanks to the FAMR, a recommendation has been made to allow consumers to be been granted access to their pension pot early to pay for the cost of advice. This should encourage consumers to take financial advice early as planning ahead of the game is essential as retirement is not a one-off decision.

“The focus now needs to be on how to help people understand all these changes, and how they can actually benefit from these government initiatives. Alarmingly, nearly three in ten (29%) of the UK’s non-retired over 60s population are not even aware of the pension freedoms, nearly a year after they came into force. Let’s hope that we are not saying the same about these initiatives from the FAMR 12 months’ after any proposals have been accepted .”


Head of UK Premier and Wealth Caroline Connellan said: “We support the findings of the Financial Advice Market Review. We believe the recommendations will go a long way to helping customers have better access to more affordable financial advice when they most need it.

“We know from our customers that there is a need and also strong demand for quicker, lower cost advice for relatively simple needs. Because of this, we recently launched a simpler protection advice service and are now testing a similar offering for investment advice, both of which have been well received by our customers. We welcome the Review’s recommendation to further simplify and clarify what is and what is not regulated advice.

“We also welcome the fact that there will be no return to commission from product providers and that the increased transparency introduced by the Retail Distribution Review (RDR) will be maintained. Having a transparent and professional market place is the right thing for our customers.

“We are committed to providing our customers with advice and HSBC is one of the few banks that continued to do so post RDR. We continue to significantly invest in and grow our wealth offering and, with more than 700 financial advisers, we are the largest UK bank provider of financial planning advice.”


Programme Director Charles McCready said: “The report by HMT and the FCA presents a well-considered and pragmatic approach to helping people make financial decisions either by themselves or with advice.  The framework of affordability, accessibility and liability succinctly encapsulates the key areas to be enhanced and will help to re-establish a savings culture in the UK.  We also commend the acknowledgement of the important role that savings play for both households and the wider economy.

“We particularly welcome the proposed recommendations on guidance and fact finds.  Policy development, led by TISA, has advocated greater flexibility in providing financial guidance to people and is publicly supported by 40 firms across all key segments of financial services and consumer groups plus a number of TISA members.  The move to clarify what is advice versus guidance provides a framework for guidance services, increasing financial decision making education and support to millions of people.  This is a big step towards helping the 40% of households that do not manage their money and the 12 million people that are not saving enough for retirement.  A guidance service aimed at people with £50k or less in their pension pots could help 60% of households better prepare for their retirement.

“We also support standardising information collected as part of fact finds. This augments our vision to create portable fact finds to enable people to go through the process once and then, with regular subsequent maintenance, using this across any guidance and advice services that they subsequently use.  We believe that this could become another tool to help people engage with their finances as well as making it easier for them to provide a robust picture of the financial state and goals to advisers.

“This is a good step in the right direction and we look forward to HMT and the FCA continuing to work with industry in developing solutions that work for and benefit UK households.”


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