FCA chief executive Martin Wheatley says advice firms have been “sitting on their hands” since the RDR rather than innovating to close the advice gap.
Speaking at a Lansons conference in London yesterday, Wheatley said simplified advice “never took off” but rather than innovating themselves to create a replacement, too many advice firms have been “waiting for the next step” to be laid out for them.
He said he hoped the regulator’s drive to encourage innovation in financial services, launched last week, would help change that. As part of “Project Innovate”, the FCA will establish a “contact hub” so that firms looking to innovate in technology can check what they are doing is within the rules or if they feel the wider system needs to change to adapt to new technology.
Wheatley said: “One area I would include here as a priority is automated advice where we have seen some leaps forward in related tech over the decades but frankly not enough.
“The reason we launched Project Innovate is we have been very concerned that particularly in the advice sector there has not been enough innovation since we launched the RDR, and there has been a lot of people sitting on their hands waiting for the next step.”
Wheatley went on to say that while he was not an advocate of replacing face-to-face advice, alternative models should be considered to widen access to advice.
He said: “One question is does dispensing advice always have to come with the high price tag it has? Or, in order to democratise it and get it to a wider community do we need to use different models? Not completely replacing the face-to-face model as I think we need both, but how far can we automate and deliver the returns that customers need in a safe and cost effective way, and how far can we tackle the advice gap that seems to exist for people below the threshold that IFAs want to spend the time on.”
Responding to a question from Money Marketing after his speech, Wheatley added: “Simplified advice for all sorts of reasons never took off. Partly because the product suite that could be offered through that service was very narrow and firms found it too constrained. Automated advice is an evolution of that.”