The Financial Conduct Authority is consulting on how to make it easier for firms to provide simplified forms of individualised financial advice to consumers.
This simplified advice would be designed to help consumers with more straightforward needs, and would not require a full assessment of all their financial circumstances. In theory, this advice would also then be more accessible and affordable than current iterations.
Firms are already able to provide more simplified forms of advice, but according to the FCA not enough are currently offering it. To encourage innovation and open access, the body is making proposals including simplifying and consolidating the suitability framework into one set of common rules and expectations.
Further proposed reforms include clarifying existing flexibilities in suitability rules with an expectation that advisers consider ‘sufficient’ information, and rebalancing the role and purpose of suitability communications to support firms making them concise, consumer-focused and proportionate.
The FCA is also taking steps to enable firms to tailor their ongoing advice services. This includes moving from requirements to offer annual to periodic suitability reviews and clarifying that firms can charge fees for both personal recommendations and related services on an ongoing basis.
Sarah Pritchard, deputy chief executive of the FCA, says: “For too long the support people need to make important financial decisions has been out of reach for many.
“A market that provides good quality, lower cost simplified advice alongside comprehensive financial advice and targeted support will better support people making decisions about their financial lives. We want to see more people getting supported, who aren’t currently, and a market that innovates and offers tailored services to meet differing consumer needs.”
From April some financial firms will be allowed to offer targeted support and suggest products to consumers based on what they would recommend to those in similar circumstances.
Rob Hillock, head of personal financial planning at consultancy Broadstone, said: “The FCA’s plans are an important step towards closing the long-standing advice gap in the UK. Too many people are making complex decisions about pensions, investing and retirement without any support, so creating a clearer framework for targeted support and simplified advice could significantly improve access to help.”
The consultation closes on 22 May.