Aifa wants FSA to set out simple and basic advice differences
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Aifa is calling for the FSA to clearly set out the difference between simplified advice and the current basic advice regime.
Director Robert Sinclair says it is not yet clear how simplified advice will differ from basic advice. He says: “The FSA has a regulatory framework within which people can operate, which is split into advice and basic advice. If the FSA wants to build something else, it needs to put a proposal on the table that sets out its ideas.”
Sinclair says Aifa cannot take a view on the qualification requirements for those delivering simplified advice until it is clearly defined. He says: “If there is advice in the cycle, we would expect it to be at level four. If, however, it is a simplified sales process and it is defined as such, then it may sit outside that.”
FSA chief executive Hector Sants said last month that it is “vitally important” that a credible simplified advice service is offered alongside full advice.
The regulator will consult on simplified advice proposals later this year.
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Readers' comments (1)
Julian Stevens | 11 Apr 2011 10:09 am
Quite so. It's all very well for Hector Sants to talk vaguely about a credible simplified advice proposition, but hardly useful to anyone if the FSA is unable or unwilling to define the parameters of what that proposition might be.
Where might the line/s be drawn between simplified and full advice? What sanctions will be applied to those who, perhaps inadvertently, overstep the mark and provide advice beyond their remit?
Will the FSA's Money Made Clear people produce a leaflet for consumers defining the differences between full and simplified advice? Will simplified advice be cheaper than proper advice? Unless it is, then how many people are likely to avail themselves of it?
And anyway, isn't simplified advice what the banks already offer, as in "We've been notified that you've just deposited £XXX,000 into your current/savings account, so what you need to do is put it into one of these"? And "Sorry, but we've no interest in trying to offer any sort of commentary on what you may already have, other than to suggest that you cash it in and invest it anew via us".
Above all else, on the strength of experience to date of simplified advice, namely lots of highly questionable "consumer outcomes", as reflected in the complaint statistics, is it really a good thing for the FSA to be trying to promote? Does it work well for consumers?
Not only must the FSA define just what it means by simplified advice, it must also define the ways in which it considers simplified advice is likely to benefit consumers. Otherwise, it'll be regarded as just another of the FSA's inadequately thought through pie-in-the-sky ideas that, like so many before it, will end up on the scrap heap as one more failed experiment that cost (us, of course) a lot of money without actually having achieved anything of any real value to anybody. Never mind the cost ~ we (the FSA) aren't paying, it sounds like it might be a good idea, so lets's run with it until it falls apart in our hands and we come up with something else to foist on the industry. And so it goes, on and ever on.
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