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FAMR working group stalls on advice vs guidance definition


The Financial Advice Market Review’s working group has stalled on work to separate “guidance” and “advice”.

After the FAMR released its recommendations in March, the FCA established a 15-strong working group of industry leaders to take forward a number of the review’s proposals.

This included publishing “a shortlist of potential terms to describe ‘guidance’ and ‘advice’, with the final choice of words and approach to implementing them to be confirmed after market research and consumer testing”.

The shortlist was due to be published in either the third or fourth quarter of 2016, but is now unlikely to be finalised for several months.

It is understood that the group has conducted preliminary work with consumer focus groups and has several meetings scheduled later in January and February, but could not meet an “ambitious” timeframe to conduct its work.

It is also understood that the group wanted to wait until a Treasury consultation on amending the definition of regulated financial advice had closed.

The consultation launched in September and ran for eight weeks.

The FAMR working group is chaired by Scottish Widows chair Nick Prettejohn, and includes both advice firm representatives such as St James’s Place chief executive David Bellamy, consumer champions such as Which? Policy and campaigns director Alex Neill, and banking representatives such as Barclays personal banking chief executive Steven Cooper.

As well as defining “guidance” versus “advice”, the group is also charged with designing “rules of thumb and nudges” to draw people to saving and advice and working with employers to develop a best practice guide to support employees’ financial health.

The guide is set to be published in early 2017, while initial testing on the rules of thumb and nudges should also be completed by the first quarter of the year, according to the original FAMR timetable.



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There are 10 comments at the moment, we would love to hear your opinion too.

  1. 15 people with their own (hidden) agendas, 15 people jockeying for position
    And from what is written…. is to pin our hopes on “rule of thumb” and “nudges”

    I welcome you to what’s akin to, riding a bike with square wheels !

  2. If you look at the definitions of advice and guidance in the dictionary and in Rogets Thesaurus, you will discover that they are synonymous!
    The reality is that the Regulators have dud a huge hole for themselves and are now finding out that there is no escape.
    Who exactly are these ignorant idiots?

  3. Nice work if you can get it. Sitting around chewing the fat, navel gazing and working hard to make the simple complicated. How much is all that costing?

    No wonder they don’t enlist sensible people, it would all be over in 10 minutes and then they would have to tax their brain finding something else to ponder.

  4. @DB – Agreed but in the name of J C almighty how on earth can so many people make something so complicated? There is a very easy solution.
    1 Determine there are two things that are being talked about with the consumer: Advice (i.e. regulated financial advice or it falls outside the F-Packs remit totally) or Guidance. As a working group they are ahead of the game as they have this already established so only need to worry about point 2. So far so good.
    2 Define advice as giving a written personal recommendation (as currently defined in the FCA handbook) to a consumer. ANYTHING other than this, by definition is not advice and therefore has to be guidance and the “whole massive” problem is solved.

    It doesn’t need to be difficult and it is irrelevant whether or not the consumer THINKS they are being given advice. For once the consumer has to fall in line with the regulations that exist for their protection and the FCA should be saying “Here is what needs to have happened for you to have the protection in place that we, the FoS and FSCS are here for. If it does not, you do not have our protection as it is falls outside our remit”

  5. @DB and Marty Y

    It really is a very clear demarcation and really doesn’t have to be so agonising. Advice is when a product is purchased. Guidance is when no specific product is mentioned on the generic and there is no purchase being made.

    Oversight and enforcement just need a little imagination. Guidance isn’t regulated to therefore no provider can accept a purchase unless from an authorised individual – who can if they so choose- also provide guidance, but this will be ‘authorised guidance’.

    Now someone tell me how to complicate this.

  6. According to the FCA’s own website “The Financial Advice Market Review (FAMR) was launched in August 2015 to examine how financial advice could work better for consumers.” So why are they allowing themselves to be side-tracked into debating how and where to draw a line between advice and guidance? The primary reason why people seek guidance instead of advice is that they think they can avoid having to pay anything. The ultimate conclusion of all guidance sessions has to be: To put any of this into practice, you’ll need to take (and pay for) advice.

  7. The comment all sound very sensible, but surly someone will be expecting a Knighthood out of this momentous issue !

  8. I would be happier if they were sitting down to discuss the need to ban advice on unregulated products by regulated firms/advisers. That is by far and away a bigger cost and risk issue to our sector.

    • Of course it is but, as its own actions and litany of failures have shown us, the FCA is constitutionally incapable of appropriately prioritising anything on its agenda (which is why an external body is required to instruct it how to do so). It’s both easier and more fun to throw stones at what the networks are doing than it is to do its job to prevent train wrecks such as Connaught (to name just one of so many).

  9. Advice = I take responsibility
    Guidance = You take responsibility

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