View more on these topics

FCA: Advice can be given online with no human intervention

FCA chief executive Martin Wheatley says financial products can be sold online on an advised basis with no human intervention.

Speaking to the Treasury select committee today, Wheatley said the FCA will consult on the dividing line between advice and execution-only in the next three months.

TSC chair Andrew Tyrie asked Wheatley if it is possible to sell a product online and offer advice without human intervention, to which Wheatley replied  “Yes”.

However, Wheatley said it should be “much clearer” when advice is been given online because there is currently “misunderstanding” from consumers.

He said: “It is a real concern because the distinction between advised and execution-only products on the web is not a distinction people easily determine. We are spending a lot of time talking to the industry about whether we need to revise our guidance to make sure products fall into one class or the other.”

In December the FCA launched a thematic review into non-advised and execution-only sales and is currently making visits to 14 sampled firms.

Speaking alongside Wheatley this morning, FCA chairman John Griffith-Jones said he was working with firms on a simplified advice model.

He said: “What we are trying to do is get this automated so there is some form of checklist to get to an answer. It may not be a perfect answer but it is cost effective for a relatively small amount of money. My view is that we should encourage innovation in this area. Ultimately we will have to take decisions about whether it is good enough but we should not let the perfect be the enemy of the good.

“The fundamental problem is the cost of providing advice at all. I would rather have some good automated system that gets to a reasonable understanding of all products rather than hidden trail commission in the past.”


News and expert analysis straight to your inbox

Sign up


There are 20 comments at the moment, we would love to hear your opinion too.

  1. The computer says – No!

    Thats it boys and girls why are we wasting our time lets give it up now, leave it to the computer. I also believe that regulation can be given on line and that there is no need for expensive regulators, theirs offices, their flowers, their 5 star accommodation, and Club Class Flights etc etc etc.

    Who were those fools that thought this idiot would be any better than the last one? Same people, same cushy jobs, same bunch of intellectually bankrupt parasites.

  2. Rodney W Leonard 4th February 2014 at 3:35 pm

    Utter rubbish you need to be with clients to see their reaction to questions and have empathy with them.
    You can diagnose a car from a distance if it is plugged in to the net but you cannot fix it! If it is a mechanical problem.

  3. Automated advice is likely to be ‘McVice’. Cheap, cheerful and ultimately not satisfying.

  4. Hang on a minute, if what they are saying works then how come we have regulation at all !!! Why have the FCA ? Never heard anything so daft. Consumers need proper assistance when making one of their most important financial purchases, how on earth can a computer do this!!! This will be just like going back to the days of pre regulation!!!

  5. Great! Let’s all play this game.
    Let’s replace doctors with my Gameboys.
    Let’s replace police officers with an X-Box.
    Let’s replace teachers with Wikipedia
    Let’s replace the FCA with a copy of Noddy Goes to School…
    Am I insulting Mr Wheatley? Yes, I am, but I hope that the message reaches him that his comment is a total pervertion of the word “ADVICE”

  6. this is hilarious, with the banks having just paid out MILLIONS in compensation for PPI do we really think they are going to run the risk of allowing the consumer to apply for their own mortgage? what happens in 10 years time when they all turn around and simply say ‘we didn’t realise we were being given advice’ ‘we didn’t understand it’ ‘we didn’t read it’. Good luck with that! There is no way any bank in their right mind will take that risk and there is NO WAY a consmuer is going to take the time to read the reams and reams of literature and caveats that would have to appear during an ‘on-line advice session’ I regulary have to ‘dumb down’ for my clients to understand me and that’s me explaining everything in simple easy to understand terms. Given whats gone on in the last 5 years the industry is lucky there are any brokers left still prepared to do the job at all, without trying to eradicate them completely. i’d love to calculate the figures on how much they think they will save by moving to on-line versus the MILLIONS they will have to pay out in compensation. it’s still all about profits to the banks!

  7. This is so incredibly imbecilic that I had to make up a new word. Does this guy realised that he is describing a non-advised sales process and defining it as advice?

    This just shows utter ignorance of the subject and that is deeply worrying…..

  8. It’s a spade. I couldn’t have said it better myself! 10/10

  9. If online advice, without human intervention, was so easy why did the FSA give up and come up with decisions trees for a simple product such as a stakeholder pension?

    The lunatics are running the asylum!

  10. Frankly I find your comments short sighted and defensive. Customers already buy mortgages online. The reasons they don’t buy more is because;
    1) There are few online application systems and those that exist are generally process driven, complicated and intimidating to complete
    2) lenders make their pricing complicated to differentiate themselves and make it harder to compare
    3) Over regulation means the customer often can’t see the wood for the trees.

    Wake up to the modern world folks. Remember the time when car & home insurance was bought through a broker? When you scanned the local paper and high street windows for properties for sale?

    Quality information is available from a variety of trust worthy sources. A mortgage is frankly nothing more complicated than a loan secured on your house. Sure there are consequences if you run into difficulties, or if rates move against you, but that’s not difficult to explain. With simpler products and more customer centric processes customers would self serve more. Technology like web and video chat can help overcome any minor queries.

    There’s a place for advice of course. Plenty of folk still find it overwhelming and value the service offered by mortgage advisors, and some loans are complex; equity share, RTB, self build etc.
    However, like may other retailers the mortgage industry has to embrace technology and adapt. The service needs to be less about the mortgage and more about removing the stress of buying a home – from finding the right one, understanding the area, schools, crime, transport, through to selection of solicitor, lender, removals firm and trustworthy local trades. I’m sure some of you already do this, banks don’t.

    I might buy most of my shopping online from Tesco, but I do a 10 mile round trip to a local butcher, join a queue and pay more for my meat, because he offers great quality and service.

  11. Who in their right mind is going to set up an online only advice based proposition where the client makes all the choices without any adviser intervention as well as all the regulatory responsibility that goes with it?

    Picture this, client accesses your online proposition reads all the information clicks through all the options and completely by accident takes the wrong annuity option or sets up a pension with £1,000 rather than a S&S’s ISA?

    Who is then responsible for the mistake? The client because they made all the choices or the company providing the “advice” because after all it’s an advice based proposition?

  12. Nick, the example you quote is clearly one where face to face advice is required.

    Online advice would be most suitable for the simple cases; no frills repayment for employed individuals buying a standard house, additional borrowing or remortgaging. A good online process would be more than capabile of routing the complex cases to an advisor and probably with the Fact Find and basic requirements already completed.

  13. David, is that not what Mr Wheatley is talking about? My understanding of what he is saying is that it is possible for a complicated advice based process to be carried out online without any intervention from a human adviser. Please correct me if i’m wrong.

    I agree with you, the simple stuff can be done online and there is most definitely a market for it. My only concern would be how this is branded. It should in no way be called an “advice” process because no one is going to be giving advice. Execution only is the current title, if that changes then fair enough but lets not create another independent/restricted mess.

  14. “It may not be a perfect answer but it is cost effective for a relatively small amount of money”

    If they allowed a simplified advice process where the only requirement was for the advice to be suitable then the costs for advice would come down.

    It seems strange that to invest £300 a month in to a pension requires reams of paperwork, hours of research to ensure there is no better alternative, yet to borrow £300 to pay for a car takes literally seconds, which is just crazy.

  15. Take a look at Screen Sharing technology solutions like Vizolution, named as finalist in prestigious FStech awards and in pilot with several FS providers as distribution channel of choice.

    Online distribution solutions like this will become the answer for the mass market, a large segment of consumers currently under-served and increasingly ignored due to affordability issues.

  16. For the vast majority of the population that have less than £5k of investable assets (and the small % of those that want to invest in anything other than cash) this is the ideal solution. I would love to know what the previous posters berating this idea would suggest for these types of investor – presumably they should all be paying you 20% of their savings in fees?

  17. David. I am a great fan of non advised (because I believe there are a proportion of people that have the skills to make their own decisions about their retirement, savings or house funding, as they do to buy car, pet or house insurance), but to describe a mortgage as being “simply a loan with your house secured against it” is rather like suggesting that a heart / lung transplant is simply a “new for old parts swap”…It may, of course, be technically such, but I sure as hell wouldn’t want to do it myself unless I was sure I had the requisite skills..

  18. Without human intervention? Really, not one human at any stage??

    Who (or should that be what) establishes the programme to be followed?

    Reminded of this:

    “Thou shalt not make a machine to counterfeit a human mind.”

    ? Frank Herbert, Dune

  19. That’s just it, with technology integrating image, voice, data and documentation it’s human and it’s fully trailed for audit purposes! What’s more it’s convenient, timely and customer-centric.

  20. No human, no computer, no server, no input, nothing but thick regulators.

    Sounds like Matrix

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm