The Financial Advice Market Review has called for the definition of advice to be amended and to allow consumers to access their pension pot early to pay for the cost of advice.
The final report as part of the FAMR, published today by the FCA and the Treasury, sets out a total of 28 policy recommendations to boost access and affordability to advice, as well as addressing issues related to the liability of giving advice.
Among the recommendations is for the Treasury to consult on the definition of regulated advice as set out in the regulated activities order, so that regulated advice is based on a personal recommendation.
This would bring the definition of advice in line with Mifid rules.
The consultation on amending the advice definition would be supported by FCA guidance on firms that want to offer “streamlined advice” on a limited range of consumer needs.
The FCA says this would be backed by case studies higlighting the main regulatory concerns when designing streamlined models.
As part of measures for a clearer advice framework, the review also calls for changes to time limits on qualifying as an adviser so that trainee advisers can work for up to four years under supervision to obtain an appropriate advice qualification.
The review calls for the financial services industry to work with the regulator to improve suitability reports by reducing their length and the time firms spend preparing them.
An advice unit should be established by the FCA to help firms develop automated advice models.
The review also wants the Treasury to “explore options” to allow consumers to access what is described as a “small part” of their pension pot before the normal minimum pension age. This would then be redeemed against the cost of pre-retirement advice.
The Treasury has also been urged to look at how to improve upon the existing £150 income tax and National Insurance exemption for workplace pensions advice.
On liabilities, the review has proposed that risk-based levies should be considered as part of this year’s funding review of the Financial Services Compensation Scheme. The review also wants to see reform to funding classes.
It says the FCA should examine whether to review the availability of professional indemnity cover for smaller advice firms.
As Money Marketing reported last month, the review has ruled out introducing a 15-year long-stop for advisers.
However, it has called for the Financial Ombudsman Service to publish more data on its uphold rates, particularly where advice was given 15 years prior to the complaint.
FCA acting chief executive Tracey McDermott says: “The package of reforms we have laid out today will help increase both the accessibility and affordability of advice and guidance to ensure consumers get the help they need when they really need it.”
Treasury financial services director general Charles Roxburgh says: “At a time when more and more people are seeking financial advice and guidance, we have set out how we can deliver a vibrant financial advice market that works in the interest of all consumers.”