The FCA has proposed new measures to enhance people’s access to financial advice so they can make investments with confidence, in accordance with its consumer investment strategy.
The FCA says the proposals will introduce a separate, simplified financial advice system, making it less expensive and simpler for businesses to provide clients with advice about some commonplace investments in stocks and shares ISAs.
The regulator is consulting on:
- Streamlining the customer ‘fact find’ so the advice is more straightforward for both firms and customers
- Limiting the range of investments within the new regime so the advice is easier to deliver and understand
- Making the qualification requirements for the new regime more proportionate so that delivering simplified advice is less costly for firms
- Allowing advice fees to be paid in instalments so customers aren’t burdened by large upfront bills
FCA executive director of markets Sarah Pritchard says: ”Now more than ever, people across the UK should have access to useful and affordable financial products and services which can improve their quality of life and support the economy.
“These proposals are part of our work to deliver a consumer investment market where people can readily access support and firms aren’t deterred from providing it.”
Aegon pensions director Steven Cameron says: “The latest FCA Consultation on ‘Broadening access to financial advice for mainstream investments’ is welcome recognition that something needs to change to address the support gap the current ‘regulated advice’ definition creates.
“The focus at this stage is relatively narrow – supporting individuals who might benefit from investing their ‘excess cash’ savings into a stocks and shares ISA. Financial adviser firms are likely to have more interest in the promised holistic review of the advice/guidance boundary which could open up a far wider range of new services to a broader range of customers.
“We also hope the FCA will consider these proposals alongside the concept of more personalised financial guidance, as tabled by Harriet Harman MP.
“The consultation, originally expected at the start of 2022, comes after an interesting year for assessing the relative attractions of cash versus stocks and shares. It’s hard to predict where interest rates, stock markets and inflation will be by the time this regime goes live.
“These proposals also need assessing through the extra lens of the new Consumer Duty, which receives 36 mentions within the consultation. Any firm considering introducing the new service will want to be absolutely sure it will deliver good outcomes and avoid foreseeable harm.
“With a maximum investment of £20,000, the cost of simplified advice whether or not spread, will be a major consideration when assessing value. There is also a big question over how to provide ongoing support for those who through investment growth or year-on-year investments exceed the £20k limit, excluding themselves from the new simplified advice service in future.”
Aviva CEO of UK and Ireland Life Doug Brown says: “We welcome today’s announcement from the FCA. With an uncertain economic backdrop and consumers facing increasingly complex financial decisions, it is more important than ever that people can access the support they need to manage their money effectively and make well-informed decisions about funding their retirement. Proportionate, affordable, financial advice can be a critical part of this. We look forward to engaging with the FCA to ensure that the new framework provides the support UK consumers need.”