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.”