FCA chief executive Andrew Bailey has told MPs he does not know if the Financial Advice Market Review proposals will close the advice gap – one of the key objectives of the report.
Appearing in front of the Treasury Select Committee committee today, Bailey was asked by Labour MP John Mann if consumers can expect to see firms “hung out to dry” by the FCA, citing the Retail Distribution Review and RBS’s treatment of some customers.
Bailey said: “The issue with the RDR was that it tackled two things. It tackled opaque commission and it tackled the general question of qualifications and training for the adviser population.”
He added: “But it contributed – it wasn’t the only thing that contributed – to the advice gap so that if you are a less well-off member of the public or you don’t want lifetime advice it has left a gap.
“The so-called FAMR proposals have got to fill that gap. We have got to be very clear in implementing them, keep asking ourselves the question will they do it or not.”
The final report as part of the FAMR, published in March, set out 28 policy recommendations to boost access and affordability to advice, as well as addressing issues related to the liability of giving advice.
Bailey was pressed by the committee about whether the FAMR proposals would fill the advice gap.
He says: “They have the potential to do it but I don’t think we can sign that one off with conviction.”
Bailey explains the success of FAMR depends on whether useful technology emerges in the market but that the “jury is out”.
He adds: “Not because fintech is bad but can it do the iterative advice process you need in that world.”