Corporate advisers and EBCs have until the end of this week to respond to the consultation on simplifying pensions and investment advice rules.
This is in response to proposals put forward by the Financial Conduct Authority, aimed at simplifying current rules while also introduce additional flexibility. This should allow advisers to deliver services that can be tailored to different client needs.
These proposed changes will also alter how regulators assess whether advisers have given suitable advice, particularly around issues like pension transfers. Professional indemnity insurance providers point out that this consultation, CP26/10, shifts the focus from whether a process was followed to whether an adviser’s judgement can be defended in hindsight.
Collegiate Management Services managing director Richard Turnbull says: “Most advisers will welcome these changes and work within the proposed framework to improve the services provided to their clients, but consistent application across the market will be key.
“Advisers will need well defined advice services, robust governance, and sufficient, proportionate records to clearly demonstrate and evidence the suitability of the advice provided at the time.”
However he adds that these changes should be a positive step for advisers, as the regulator is acknowledging the need for flexibility which should enables advisers to offer more tailored, and more commercially viable advice models for consumers.
Turnbull adds: “The effectiveness of the regime will also depend on how confidently the regulator can identify and address firms that seek to use greater flexibility inappropriately. Another real test will be how the amendments are interpreted by the Financial Ombudsman Service, particularly in terms of how this influences the outcome of complaints against advisers.”
He adds: “Past issues, such as the British Steel Defined Benefit pension transfer debacle, demonstrate how greater flexibility, if applied poorly by a small minority, can have wider consequences, with the whole market often judged collectively.”
