PIMFA, the trade association for the wealth management and financial advice industry, is calling on the Industry, Government and Regulators to work together to bring about fundamental reform of, and wider consumer access to, professional financial and investment advice.
As part of PIMFA’s commitment to promoting a savings and advice culture that improves the financial and mental wellbeing of every UK consumer, PIMFA has published 12 recommendations in its Future of Advice policy paper that it believes will help create a thriving Industry Fit for the Future that offers Professional Advice for All.
Recent survey findings show 90% of consumers have never taken paid for financial advice and 79% of those who had not taken advice had no intention of doing so in the future1. Some of this is down to a lack of awareness of the benefits or need for advice, with 62%2 of consumers believing they did not need help managing their money.
Another issue was a lack of trust in the advice profession, perpetuated by pension scandals or news stories involving consumers with a bad experience of financial advice. A lack of awareness around the value of advice and the cost of services also play a role. Yet firms find themselves unable to offer lower cost services in the face of rising and unpredictable regulatory costs.
The policy recommendations set out by PIMFA today, seek not only to recognise these issues but to offer solutions that will help the advice industry adapt to the social and demographic changes taking place in Britain, ranging from an ageing population to changes to working patterns, pension freedoms and growing digitisation within the advice industry.
The 12 recommendations in the policy paper call for:
- A review the definition of advice
- A review the regulatory perimeter
- The approval of financial promotions to become a regulated activity, and stronger regulatory controls in relation to the exemptions for high net worth and sophisticated investors
- Improved online consumer protection from financial scams through the Online Safety Bill
- Effective implementation of the financial capability strategy
- Promotion of the value of advice and the financial advice sector
- Effective sign-posting to advisory services to be put in place
- The creation of new lower cost advice services to provide effective financial advice to a wider market
- Provision of a regulatory framework to support such a simplified advice service
- A review of the Handbook to ensure a clearer, effective, proportionate and cost efficient regulatory environment
- A review of and improvements to the FCA supervisory regime
- Promotion of high standards of behaviour and competence across the sector to increase professionalism
PIMFA has already begun some of this work and called on the government to review the regulatory perimeter last year. In addition to giving the FCA the formal power and remit to recommend changes to the Treasury that would enhance its ability to meet its objectives – in particular to prevent consumer harm. PIMFA also called for regulation of financial promotions as well as improvements to the supervisory regime.
Among PIMFA’s immediate priorities this year will be to lobby Government and to work with stakeholders across the industry, consumer groups and the Regulator to ensure that economic harms are included in the upcoming Online Safety Bill to provide greater protection to consumers from financial scams.
Liz Field, chief executive of PIMFA, commented: “There is now more than ever, an increased need for financial and investment advice and support, but most people still don’t engage with financial advice, seeing it as an expensive service for the well-off.
“PIMFA believes that access to advice should be an affordable option for everyone in the UK. Advice plays a pivotal role in a well-functioning financial services landscape, providing individuals with the support they need to navigate their financial journeys, as well as providing access to products and markets they would not be exposed to otherwise.
“PIMFA is committed to broadening consumer access and to creating the best environment for the financial advice and wealth management profession to deliver their services and meet their clients’ needs. We recognise that none of the recommendations we put forward today can be implemented overnight. But if we are to create an Industry Fit for the Future that ensures Professional Advice for All, it is vital the industry, regulators and government work together.”