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ABI: FCA is ‘frustrating’ simplified advice progress

The Association of British Insurers has raised concerns providers may not be able to offer simplified advice in time for next April due to a lack of clarity from the FCA.

ABI director of regulation Hugh Savill says the trade body’s members are keen to develop online “mass market” simplified advice offerings.

But he says it is not yet commercially viable for firms to do so following the FCA’s simplified advice consultation paper, published in July.

The consultation – which aimed to clarify the boundaries between advice, non-advice and simplified advice and to give firms the certainty to develop new models – closed last week.

Savill says: “Our members say this still does not make simplified advice a commercial proposition. There are a number of reasons for this, including concerns over future liabilities.

“Setting up an automated simplified advice offering means doing a cut-down version of the due diligence for full advice and that is quite a vulnerable position to be in if things go wrong.”

He adds there is a “frustration” among members that the FCA has not made more progress, particularly given the pressing timetable of the Budget reforms.

He says: “Our members are all looking at the changes taking effect in April and hoping as much of the FCA’s simplified advice work as possible will be ready for then. But that means working to a very tight timetable.”

Savill says the ABI is also looking at whether it could develop a “generic benchmark” for simplified advice on behalf of its members.

He says: “This may be particularly helpful for our smaller members and could involve setting out which issues the process needs to look at for customers at a certain lifetime point.”

The trade body also highlights concerns over the impact of the customer’s perception of whether they have received advice, the treatment of complaints by the Financial Ombudsman Service and the collection of information on customers’ existing investments.


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Uhuh So are you surprised?

    Even if the FCA offers clarity on simplified advice – does anyone think they and the FOS will stick to it in the future?

    Oh and who is paying for the providers new foray into advice? Not those clients trapped in heritage policies ?

  2. Don’t get me wrong, anything that simplifies advice I’m all for. But I agree with Garry…… will the FOS etc stick to it in the future?
    If I was a big financial insurance company / bank considering moving into this I would be very very wary.

    Is simplistic terms, weren’t endowment sales linked to mortgages carried out in a simplified advice world. Yet when the s*** hit the fan the insurance companies and banks had to pay huge amounts of compensation when the endowment didn’t clear the outstanding mortgages. (Whereas had it been ‘highly regulated’ they would have said something along the lines of interest rates are at 10+% and the growth assumptions have taken this into account, if base rates reduce and your mortgage interest rate goes down you should use these savings to increase your contributions to the saving vehicle or use the saving to part pay off your mortgage …….obviously better worded that that 🙂

  3. ” Simplified Advice ” or as we call it . . . “Bunk Um ” ( or perhaps Bunk em ? ). Interesting the FCA continue to moan about Financial Advisers – and poor quality advice. It is like listening to Alastair Darling repeating on himself about ” The Currency ” to be used followed up by the Gov’ ner of the Bonk of England, Shark Manney ( firstly supporting the idea that Scotland wold not be able to use the United Kingdom /World currency – the Pound ) – and Her Majesty, Elizabeth Regina . . . . coming in to add to the political debate ( then whispering in Cameron’s Ear ), then the Lies by Cameron – who offers everything – to get his NO VOTE ! ( destroying Labour in the process ) and produces NOTHING. Now Cameron claims he will have to sort out – the Scottish MP’s voting in the United Kingdom Parliament ?
    If this was the case surely this was a relevant FACTOR – which Cameron and Osborne and their Cronies in the ” working together party ” did NOT EXPLAIN – A CRUCIAL ELEMENT which if provided – the people may have voted with their feet – and their heads. Perhaps we should have the Vote all over again as Cameron has defaced the BALLOT PAPERS ! Politics, . . . like Simplified advice – is corrupted by failure ! Failure to gather ALL THE RELEVENT INFORMATION – dilute it and direct it to Tied Agents and RESTRICTED ADVISERS – rather than GOOD SOUND SUITABLE ADVICE. However the reason behind the stupidity is for Cameron and his Cronies to put in place grey areas – to PROVIDE OPPORTUNITES TO MAKE ERRORS – for the culture of Compulsory Fines – or as they REALLY ARE funding for an insolvent TAX Office. The reason is the Tories has reduced the wages and therefore the Tax Take – youngsters out of universities ( after paying their Fees – and having taken out Loans ) – CANNOT OBTAIN GAINFUL EMPLOYMENT – a result of corruption and Fraud in Government ! Solicitors who have spent five years in Law Schools CANNOT GET ACCESS TO A JOB . United Kingdom is BUST – INSOLVENT – under Cameron – who is taking over the mantle of the VERY WORST PRIME MINISTER the united Kingdom has ever had . . .NO wonder the previous occupant of the title of Worst Prime Minister Gordon Brown – helped out at Edinburgh’s rallies and the Tories ” Working Together Party “. What price . . . . . . .. Simplified Advice , Mr Wheatley ?

  4. The principal component to strip out from the advice process to facilitate simplified advice is a comparison with a multitude of possibly (and only possibly) suitable alternatives. Simplified advice could be encapsulated in Proposition, Cost, Risks and Tax with, perhaps, a brief summary of suitability. Whilst people might be sold (aaagh!) something that isn’t an absolutely perfect fit for their needs/objectives/ aspirations/goals and all the rest of those things of which they themselves have no real idea, they’d probably get pretty close in the majority of cases and that might well be a step forward (not back) from where we are now.

    But the FCA just CANNOT bring itself to allow such a straightforward and workable framework. Every piece of financial advice, as far as the FCA is concerned, must meet the criteria of absolute suitability ~ the pot of gold at the end of the rainbow. This, unfortunately, unhappily overlooks the way things work in the real world, where six different advisers will come up with six different strategies to address any given scenario. That is the single biggest obstacle.

  5. Simplified Advice is seriously Lacking in content and Ethics. Basic common sense dictates that anyone giving Guidance – or Direction ( whether a parent or MA’s ) needs to establish . . .background . . .objectives . . .Needs .. . .Analyse the situation . . .check Affordability .. .check out ” Capacity for loss ” Risk Assessment . .. . Build a lifetime cash flow . . . .
    To go through such a routine is BASIC PLANNING – HELP and Assistance – within a framework of Good Practice – Ethics – Professionalism – Integrity. Put simply in a clear transparent manner.
    Leave the losers in the FCA who muddy the waters confuse and irritate – and as a result have no integrity or credibility . . .to give ” guidance “, or ” General Advice “. In other words Severely Lacking in Substance or Clarity .

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