The FCA has hinted that Brexit might lead to a reduction in demand for advice.
In a paper this morning the regulator set out how it will judge whether last year’s Financial Advice Market Review is a success, including demand side factors like the number of consumers receiving advice and supply side factors like the number of advisers in the market.
The FCA noted the possible impact Brexit and a persistent low-returns environment could have on these metrics, however.
The regulator noted “ongoing economic and political uncertainty” as Brexit negotiations continue, with firms potentially exiting the market and consumers not having enough confidence to seek advice.
The FCA said: “On the supply side, the uncertainty regarding the EU negotiations could influence firms’ decision making and strategies with respect to the UK market, while on the demand side the uncertainty may impact consumer confidence, which may in turn impact on demand.”
The regulator said low-interest rates may squeeze wallets so impact upon consumers’ ability to get advice, but could also lead more people to seek advice to generate better returns.
The FCA said: “The low returns environment may impact consumer demand for advice and guidance. In this low return environment, consumers may consider that seeking support in relation to purchasing investments is less worthwhile and thus could constrain demand.
“Alternatively, demand could be positively impacted should consumers seek advice or guidance to generate higher returns from investments.”