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Aviva chief urges Govt to loosen advice regulations

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Aviva UK Life chief executive Andy Briggs is pressing the Government and the FCA to loosen regulatory requirements so advisers can develop low-cost advice models.

The Treasury and the FCA are to carry out a major review into financial advice to establish how the market can function better for consumers.

The review will be supported by an advisory panel led by Scottish Widows chair Nick Prettejohn and will look at efforts to bridge the advice gap and the obstacles preventing the growth of affordable advice.

It will cover products including pensions, annuities, savings, mortgages, and insurance. Initial work will be done over the summer with a consultation in the autumn.

Final proposals are expected ahead of Budget 2016.

Briggs is calling for a more pragmatic approach from the regulator so advice can be given on single products without considering other plans or assets.

He says: “At the moment the way the regime works, if people get advice there needs to be a 100 per cent success rate in getting the right outcome. That means an awful lot of people don’t get advice.

“We need to be prepared to slip that 100 per cent. So for example, you should be able to just advise someone on their pension without taking into account other products like existing endowment policies.

“There is a chance the advice won’t be fully optimal but, for the vast majority of people, the outcome will be much better than if they get no advice at all. We need some pragmatism from the regulator.

“If you try to ensure that advice always leads to customers making the right decision, advice will become a luxury good.”

Zurich UK Life chief executive Gary Shaughnessy agrees.

He says: “The burden on advisers has gone up materially over the last five years. There are people who have basic needs for help at retirement and there must be ways of making that simpler and more cost effective for advisers.”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. Douglas Baillie 6th August 2015 at 5:50 pm

    All of what Andy Briggs is saying is true, and the proposed changes as outlined by him would be most welcome, particularly by pension advisers. Clients just want low cost, simple advice, accompanied by a simple personal recommendation, and do not want to engage in having to fill in full blown fact finds, when all they really want is some straightforward, easy to understand pension advice.
    As long as their are conflicts of interpretation of the FCA’s own rules, COBS, Miffid and Perimiter Guidance, and a real fear of falling foul of a FOS adjudicator, advisers will continue to remain concerned about making inadvertant costly mistakes, and try to cover off everything by churning out massive, multi-page ‘suitability letters’ that are designed to leave nothing to chance. No wonder the public are not asking for advice.

  2. William Burrows 6th August 2015 at 5:56 pm

    I take a different approach – there doesn’t have to be any compromise on the quality of advice but the whole process can be made more customer friendly and more cost efficient – If anybody is interested I wrote about this in the Retirement Advice Survival Guide which can download at http://www.williamburrows.com – go to publications

  3. So what was the RDR all about then? It was precisely to stop Uncle Tom Cobbley and all giving second rate advice.

    If you need a lawyer or accountant you can’t get one on the cheap – so why should you be able to get financial advice on the cheap?

    • Exactly Harry. I’m sure there are many self-employed people out there who would love a cheap accountant, but they chose to do it themselves and save on the costs. You don’t see accountancy bodies running around saying ‘how can we serve this market’.
      ‘We need to provide access to low-cost quality advice’, two words which shouldn’t go in the same sentence. I want a cheap Ferrari but it’s not going to happen.

  4. Take The High Road 6th August 2015 at 7:10 pm

    ….so, Briggs is calling for a more pragmatic approach from the regulator so advice can be given on single products without considering other plans or assets………yes, the banks and the direct salesforces would just love that, wouldn’t they? Next, commission(sorry, adviser charges) will also be a thing of the past!!

  5. The fact that Aviva is now calling on the government as well as the regulator suggests that despite the regulator having made vague noises in support of the idea of a simplified advice process, it hasn’t actually delivered on it and, unless the Treasury gives it a good hard shove, it probably never will. Of course the outcomes from simplified advice won’t always be perfect but in most cases they may well be reasonably good and a reasonably good outcome is better than none as a result of no action at all.

  6. I suspect the motives of Andy Briggs but what he is saying is true in many respects. The impact of our regulators and the regulatory framework which now exists is that the cost and complexity of providing fully documented holistic planning makes it poor perceived value for money for many people. Whether or not they are right is immaterial, since they never take the advice to find out if they are right or wrong. So a whole swathe of middle England never gets advice of any kind and therefore never does anything. RDR was all about creating a Utopia and setting up an ideal world, but in fact despite lofty objectives it has failed on many levels. Whilst many underqualified (not just by exams) advisers are no longer regulated the problem is that those same advisers have often mutated into unregulated advisers outside the control of regulation. Busying themselves selling car park spaces in Dubai and commercial and residential property schemes in Bulgaria and the Caribbean. SO has that really helped? I don’t think so. The analogy about accountants is also flawed, because in fact there are shades of accountancy expertise – a FTSE 100 company would sensibly make use of senior partner level expertise at Ernst & Young and would get good value by doing so. However a sole trader might be able to get the level of expertise and service they need and want from an AAT qualified bookkeeper. The sole trader COULD pay for a partner to give him or her advice on how to manage their business and how to develop it but in practice would prefer not to pay £500 per hour for the privilege if their turnover is only £20,000 per year. And the sole trader would be right not to do so in many cases. Back to financial advice…..the regulator has to stop aiming for top premium quality at premium prices for everyone when in fact what is better for many clients is top value advice targeted to their specific needs. Those that want need and are able to afford top quality deserve it. Those who cannot afford it but want better than they are getting (nothing!!) deserve to have the option to pay less and receive a less than premium service.

  7. In essence many consumers simply do not want full advice, they want the options explaining to them in order that they can make an informed decision. Then they may want advice about product/fund selection. Importantly, they also want someone to take care of the mechanics of the transaction, i.e. completing the paperwork correctly, liaising with providers.

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