The FCA has confirmed plans to carry out a review of the advice/guidance boundary.
In a speech at the City and Financial Global: The Future of UK Financial Services Regulation Summit today, FCA executive director Sarah Pritchard said the review will aim to understand “how to reduce the regulatory burden while continuing to provide the right level of consumer protection”.
Pritchard said that market integrity and consumer protection are essential components of fostering economic growth and global competitiveness. In order to make the UK the finest location in the world to conduct business, the FCA continues to look for measures to decrease regulatory burden where practicable while maintaining high standards.
She added that in the past year, the backlog for pending authorisations has been reduced by 40 per cent, and the FCA is testing automated forms to expedite the procedure even more.
Pritchard confirmed that the FCA is considering changing the regulations governing financial advice so that mass-market consumers can access specialised knowledge for lower-risk products.
AJ Bell head of retirement policy Tom Selby says: “The cost-of-living crisis and ructions in currency markets are dominating the headlines right now, with millions of savers and investors bombarded with information from all angles and facing often complex choices about what to do with their money.
“Those who are willing and able to pay for regulated advice are well served by the market and should be able to navigate through the current storm with a clear-minded focus on the long-term.
“However, those who do not take advice need better, more personal guidance so they can make financial decisions which are more likely to lead to ‘good outcomes’, in line with the FCA’s Consumer Duty.
“We welcome the FCA’s acknowledgement of this issue and urge the regulator to push forward its review at pace. A culture of fear has built around providing guidance that risks going anywhere near the blurred advice/guidance boundary, with firms and employers keeping a safe distance from the boundary and ordinary people receiving less help making decisions as a result.
“Although there will always need to be a boundary between advice and guidance, firms need a clearer understanding of where that boundary sits and what they can and can’t do.
“The Financial Ombudsman Service (FOS) needs to be included within this review process, as its interpretation of FCA rules will go a long way to determining how far firms are willing to go when providing guidance to customers.
“Ultimately it may require legislation from Government to address the current advice/guidance impasse, but the announcement of this review is at least a step in a positive direction.”
Hargreaves Lansdown head of government affairs and public policy Anne Fairweather says: “For a long time, Hargreaves Lansdown has recognised that the advice boundary is a barrier to our ability to guide clients towards better outcomes. Whether it is pointing clients to a lower-cost index-tracking option or reducing the risk that clients run out of pensions savings too soon, there’s a bigger role firms can play supporting their customers.
“This review is a big opportunity to demonstrate how innovation and data analytics can guide people with their financial choices. We see this as a crucial step to help savers and investors in the cost-of-living crisis and support the nation as we rebuild our financial resilience in the longer term.”
