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Advisers hope FCA review will bring greater clarity on non-advised sales

Advisers are hopeful the launch of an FCA thematic review into non-advised sales and simplified advice will bring greater clarity to that segment of the market.

Last week the FCA wrote to a sample of 14 firms asking them to supply information on the non-advised or simplified advice services they offer, ahead of onsite visits to be conducted in January and February.

The letter says: “Following recent growth in non-advised and simplified advice investment sales, the FCA is undertaking a thematic review to examine these distribution channels in more detail.

“We want to take an early look at whether these models are delivering good outcomes for consumers.”

Firms are being asked for information including a risk analysis of the service, and details of the process for compiling any ‘best buy’ product lists.

Jacksons Wealth Management managing director Pete Matthew says the review could prompt more players to enter the market.

He says: “If the FCA can use the review to put some meat on the bones of what it expects on simplified advice and non-advice then it could act as a green light to firms and help address the advice gap.”

Aurora Financial Planning chartered financial planner Aj Somal says the distinction between advice and non-advice should be made clearer.

He says: “There is a danger of clients thinking they have received advice when they have not. Non-advised and simplified advice services need to carry clear warnings to the customer.”

Hargreaves Lansdown head of financial planning Danny Cox says: “We think it is important to have a robust and competitive direct to consumer market in the same way there is a competitive advisory market, and will look to support the FCA in any way we can.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. I would like to see a streamlined advice process for small top-ups to large portfolios of long standing that are continuing to meet the client’s original objectives (provided, of course, that those original objectives remain unchanged). In many, if not the majority of such situations, it really isn’t necessary to go back to Old Kent Road (so to speak) and embark anew on all the rigmarole of re-establishing the client’s ATR, CFL, objectives and all the rest of it.

    Clients simply don’t see the need for such a process to be repeated and advisers almost have to apologise for having to take the client through it all over again on the grounds “Because my compliance department says so and they refuse to listen to any arguments to the contrary, regardless of what you and I may agree.”

    Such requirements are all too typical of the quagmire of costly red tape and bureaucracy created by the FSA which, hopefully, Martin Wheatley will recognise and enact measures to address.

  2. @Julian : “the quagmire of costly red tape and bureaucracy created by the FSA …” – are you sure you have identified the correct source of your quagmire (and I’not making a petty comment about FSA / FCA either!)??

  3. If, Gill, you’re referring to what the large networks all seem to ordering their members to do to render even the simplest of transactions fully compliant, then maybe this is where much of the quagmire is coming from. But I spoke last week to a DA colleague and what he told me about what he has to do to comply fully with the endless procedural directives from the FSA/FCA gave me pause for thought. The main problem seems to be one of interpretation, not just on the part of practitioners but which person from the FCA happens to be looking at your file. A couple of weeks earlier I spoke to another DA colleague who told me of a highly successful IFA who’s managed to hone his letters of recommendation for most investments down to just two or three pages and the FCA had declared them to be quite satisfactory. Perhaps he was lucky. So who knows just what the FCA actually wants to see? The big networks are reportedly running scared of the FCA and insisting that every write-up of every transaction, however minor, including even fund switches, is totally bomb-proof against any future challenge, even though the burden on their members is almost intolerable and most clients see such write-ups as totally OTT. Where lies the balance between what’s actually necessary and what the regulator’s rules stipulate? Lost in the woods, many would say.

  4. Which could be why someone to represent the interests of those firms whose agenda is not over-run by restricted product providers and networks, for example in calling for consistency or level playing fields, and in seeking clarifications and interpretations from the regulator, might have been judged to be important …

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