AJ Bell is the latest to back ‘targeted support’ in response to the government’s consultation on redrafting rules around advice and guidance.
AJ Bell welcomes the proposed changes to financial advice, describing a “game-changer” for investors and savers. The proposed changes, which were detailed in a joint document released by the FCA and Treasury, would enable non-advised companies to provide customers with targeted support.
AJ Bell urges regulators to move forward with the plans, which align with broader ‘Consumer Duty’ reforms.
AJ Bell D2C platform managing director Charlie Musson says: “Ensuring people are able to access the help and support they need, either through regulated advice or guidance, is critical to building financial resilience in the UK. The existing regulatory framework makes it difficult for firms to offer anything beyond relatively basic information to non-advised customers without risking straying over the boundary from guidance to advice.
“This lack of clarity over the advice guidance boundary has the potential to undermine the intentions of the FCA’s landmark Consumer Duty reforms, with firms reluctant to act to provide nudges aimed at delivering good outcomes for fear of finding themselves on the wrong side of the boundary.
“Regulated advice remains the gold standard but the proposal to create a new ‘Targeted Support’ regime that is sensibly structured alongside this could be a gamechanger for consumers, potentially helping millions of savers and investors make better-informed decisions about their finances. The regulator has identified millions of people with investible assets who are crying out for help making decisions, but many cannot afford advice or prefer to manage their own investments on a DIY basis.
“It is therefore vital those who do not receive advice receive the help they need. The FCA and Treasury deserve credit for tackling this difficult problem head-on and exploring solutions to both improve guidance and make advice more accessible.
“If the regulator and government decide to press ahead with Targeted Support, the goal should be ensuring as many people as possible can benefit from better quality, more personal guidance about their finances. The higher regulatory standard set by Consumer Duty and the substantial requirements to monitor and review consumer outcomes under the Duty will provide protection against the risk of consumer harm.
“We strongly urge the FCA and government not to prescribe solutions under Targeted Support. Firms need the flexibility to design interventions using knowledge of their customers, rather than based on a broad-brush approach dictated across all businesses. Taking a less prescriptive, outcomes-based approach should free firms up to innovate in ways that best suit their customer base.
“It is vital any new Targeted Support regime can be implemented as simply as possible across a firm’s entire customer base. It is important that, from a customer’s perspective, Targeted Support is simply seen as normal and embedded within existing consumer journeys, rather than being a distinct, separate offering, which may lead to confusion. Ultimately, the aim should be to shift the guidance boundary to a more sensible place. The Consumer Duty should be the regulatory standard against which firms’ Targeted Support interventions are measured.
“The discussion paper states customers would need to make a ‘clear, positive’ choice to receive Targeted Support and that it would sit between information/guidance and regulated advice. Requiring customers to proactively opt-in to receive this support would significantly reduce the number of savers and investors who benefit.
“Given the intention is for this support to be superior to the help currently available, we recommend an opt-out rather than opt-in approach is adopted. This would preserve consumer choice for those who prefer not to receive nudges based on their circumstances and maximise the number of people who benefit from Targeted Support.”