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FAMR has not closed the advice gap, advisers rule

Advice advisers eraserOnly one in seven advisers believe that the measures introduced in the  Financial Advice Market Review are helping to close the advice gap.

Despite widespread positive support for FAMR’s measures around streamlined advice and tax breaks for employer-arranged advice, a survey from Aegon shows advisers do not think they are helping individuals take advantage of full financial planning services in practice two years on from the release of the final FAMR report.

While 70 per cent of advisers agreed with the new definition of regulated advice, 69 per cent said it is not helping more people access advice.

Nearly half the respondents said clearer guidance on what can be provided through streamlined advice was a positive, but only sixteen per cent believe it will have a “real-life” impact.

Just eight per cent of respondents said that new factsheets for employees and trustees to clarify what financial help they can provide without straying into advice is helping the advice gap.

Advisers also expressed doubt that the Treasury’s pensions advice allowance introduced last year will impact the gap.

A joint Money Marketing/Zurich survey earlier this year found 80 per cent of adults had not heard of the pensions advice allowance, which ups the cap on funds that can be drawn from pensions tax-free to pay for financial advice from £500 to £1,500.

The Aegon research shows just 37 per cent of advisers believe the move is contributing to closing the advice gap.

The concept of the pensions dashboard has the support of 69 per cent of advisers in total. Just 45 per cent of advisers believe its introduction, planned for 2019, will help close the advice gap however.

Alan Hughes: FCA finally getting somewhere with FAMR

Aegon director of pensions Steven Cameron says the industry should continue to work alongside the regulator to “turn major opportunity into practical benefit.”

He says: “FAMR presented a huge opportunity to address the advice gap. When it comes to how effective these have been in practice, the findings are very disappointing.”

The FCA plans to review the impact of FAMR alongside the RDR in 2019.

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Comments

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

  1. Why would anyone have thought that FAMR would reduce the advice gap?

    Work we did on the subject plus our consultation with HMT confirmed that FAMR was a simple excercise of consulting knowing that very little views expressed would be listened to.

    Readers may be interested in the observation here from 2010-

    https://bit.ly/2Hh3MTw

    This was about RDR, so another reason why nobody should be surprised.

    The thought that both RDR and FAMR will be reviewed fills me with horror. Nobody listened the, why sho the industry assume that 2019 will remove the deafness.

    It was no way to ‘run a ballroom then’ and it is not now.

    Just saying!

  2. The problem is that advice involves costly regulation, guidance does not. Has anyone actually asked the public whether they are happy to pay for consumer protection, or prefer to make their own decisions for free from guidance tools? I do not think they know how much of their fees are not going to supposedly highly paid advisers, and that is partly the reason why they will not seek advice.

    This argument will always go around in circles, the Government and the Regulator want consumers to have access to quality advice at little or no cost, whilst the regulatory framework does not allow it, unless we are prepared to give free advice, and there is clear pressure on IFAs in particular to do so, as a moral duty.

    These days there is a wealth of information out there, in fact an information overload, when all most people want is good advice from someone they can trust.

  3. complete waste of our money and a load of wind reviews to come more wind and cost for us all useless industry this is thank god not got long to go before i am out and good riddance to it

  4. FMAR has not closed the advice gap ?

    No it hasn’t, you are right, but then it was never meant to, despite the proper-gander that this was one of its aims !

    FMAR was in fact a rearranging (once again) of the deck chairs and doing what they have always done and expecting different results

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