FCA chair: Advice and guidance divide has been blurred by technology

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FCA chairman John Griffith-Jones

Defining advice and guidance has become more difficult as technology has progressed, the FCA’s chairman has said.

In a speech to Cambridge’s Judge Business School last night, John Griffith-Jones said understanding what should fall within the regulator’s remit had proved a challenge in recent years, for example where the process for setting Libor rates and physical trades in commodities fell outside the FCA’s perimeter.

He added that new technology had made some of these issues worse, including by making the divide between regulated advice and guidance “greyer.”

Griffith-Jones said: “The problem is exacerbated further by the remorseless march of technology. Rules that were designed for the paperwork era do not work necessarily for the online one. The distinction between advice and guidance, once reasonably clear, has become much greyer with the advent of platforms and the potential of robo-advice.”

Jones added that while the regulator’s approach had to adapt to Government policy, the FCA needed to remain independent from Westminster and was “perfectly capable and willing” to discuss what policy change would mean with Government.

He said: “The Government decides to change the pensions regime, the regulatory regime must follow suit. The Government wants a cap on the cost of pay day loans, the regulator is asked to implement one. With Brexit in train, we should not seek to hide from change rather than co-opt it, and clarify its impact on the regulatory regime as quickly as is possible.”

“Policy is for elected government not for the regulator. This is not to say that the regulator should be passive in any sense; the FCA is perfectly capable and willing, to draw Government’s attention to the consequences of policy change. But experience tells us that regulation acts most effectively as a support for Government policy not a substitute. It also makes clear that regulation cannot be independent of Government, although regulators most certainly should be in discharging their duties.”