The FCA is confident in the future of the advice industry but will need further feedback as it sets about reviewing the success of the RDR and the effectiveness of the Financial Advice Markets Review.
Speaking at an Adviser Home/Octopus Investments event this week, the regulator’s head of customer distribution policy Alex Roy said the FCA’s review will require advisers to hand over even more information.
He said: “There will be another data collection – hopefully small – on data and charging and advice models. We are also doing consumer research.
“Hoping there will be regular updates as we go and we are looking to hold more events and talk to more advisers. It’s about the industry pushing us as a regulator into a space that the consumer truly needs.”
The FCA is expected to issue its first full progress report on the review in the second half of next year.
Roy said: “We really have been pleased in the last years since our first review of RDR. The key goal of RDR is making investment market better for consumers which we have seen in many ways. Our goal with FAMR was simpler, it’s about easier and more affordable access to advice.
“Financial services in the UK is one of the UK’s greatest success stories and advice is a major part of that success.”
Roy said the FCA is also aware that advisers are not always confident in its communications.
He said: “Unsurprisingly we hear a lot about the regulatory perimeters between firms and the FCA and we acknowledge that.”
The FCA has a vital role to play in meeting advisers’ expectations but remains committed to servicing customers rather than advisers which are its client, he added.
“I agree we could do more and I’d like to see us do more, but we will not move from that fundamental position of being around to protect consumers.”
The FCA outlined its concerns in the industry in a long-awaited call for input on its RDR/FAMR review in May.
These included fears that initiatives put into play to protect customers and foster transparency in the industry may not have been effective.
Roy said advisers have not, however, been forthright with presenting their ideas for a better functioning industry.
He said: “Following FAMR, the idea was to open the doors and tell the world we are here and open for advisers to come and bring their ideas for development and we’ve not had as many as we expected.
“We are here to help firms develop innovative solutions though our development and innovation hub. It’s important to us because we want to see consumers get the services they can afford.”
Ongoing concerns about pension transfers are currently high on the FCA’s assessment radar as it continues to collect data for the review.
Roy says: “We also heard a lot about defined benefit to defined contribution pension transfers and we’ve seen a lot of problem with quality of advice in this area and ongoing issues with PI insurance.
“This adds to the main things we have heard in the review so far which includes lack of access to appropriate services, unclear regulatory perimeter for advice, challenges around innovation, engaging consumers with the need for advice”
Remaining areas of concern the FCA is set to focus in the next 12 months include consumers’ struggles to assess the cost of advice.
Roy said: “Many may overpay for services they don’t need and advice may not be available for consumers with small pots. When we look at our work on advice and guidance we recognise support and help is needed now more than ever a people try to navigate themselves through difficult decisions.”
The watchdog also has plans to ramp up its look at conflicts of interest that could lead to poor outcomes.
It will spend more time assessing how technology can be used to support advice offerings.
Roy said: “We need to look at how technology can be used to create new solutions to meet customer needs because the flip side of professionalism is the more qualified advisers are, the more costs are pushed up.”