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Categories:Advisers,Regulation

FSA to consult on simplified advice guidance

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FSA chief executive Hector Sants has revealed plans to consult on guidance for simplified advice, as he admits simplified advice services will be crucial post RDR.

Speaking at a British Bankers’ Association conference in London today, Sants (pictured) said the regulator realises the RDR means significant change for the industry but believes it will lead to an improved market in the long term.

Sants says: “I should however note that we do recognise that, whilst not specifically an issue which the RDR seeks to address, in order to ensure the financial market place is fully effective for investors, it is vitally important that a credible simplified advice service exists alongside the full advice offering. 

“Ultimately it is for firms to introduce such services, but we are currently working with them and later in the year we plan to publish more detail on the regulatory framework.”

The FSA plans to consult on simplified advice guidance later this year.

BBA chief executive Angela Knight wrote to Sants last month arguing that a simplified advice model is needed to meet the requirements of mass market consumers post RDR.

It follows a consultation on simple products put out by the Treasury in December.

In the consultation the Treasury called on the financial services industry to develop a range of simple financial products, starting with savings and protection products.

The Government’s idea of simple products ties in with work carried out by the BBA and the Association of British Insurers in developing a simplified advice process.

But although the work has been ongoing for several years, Money Marketing understands that the regulator has been dismissive of the simplified advice models put forward so far.

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Readers' comments (5)

  • Even the simplest idea becomes complicated when it is regulated by the fsa - Simples

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  • The irony in what hector sants said will go straight over the FSA's head.

    It is the regulations that have made advice so complex in the first place. Now they want to consult on simplified advice... for the banks no doubt.

    Around and around we go - where it stop; nobody knows. Only the poor consumer pays the price and a few thousand jobs are lost! All for the sake of what? The regulators existence?

    They would be laughable if they were not is such a powerful yet unelected and unaccoutable position.

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  • Nothing is simple, one day we will all be picking up the pieces once again.

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  • It really could be pretty straightforward for simple business scenarios; solicitors, accountants, etc once deemed suitably qualified, are allowed to provide advice without the regulatory burden of the kind we face. E.g. to take just one element, say SRs, you dont get a 24 page report with your Will explaining the reasons behind whichever clause was included or omitted and why, and you dont get a 30 page report with your company accounts explaining the reason why certain figures went in certain sections and why certain options were excluded. I.e. once we're deemed competent enough (ideally by our own IFA professional body at some point), we should be allowed to get on and do the job with a greatly reduced regulatory burden. It is of course referred to as the regulatory dividend and has been virtually invisible. If the instant payback for higher qualifications was the ability to deliver advice with massively reduced costs (benefiting clients as well) then I think very few IFAs would be complaining.

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  • quango quango quango we know the tune well

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