View more on these topics

FCA chief: Low interest rates are putting people off advice

Andrew-Bailey-PRA-2013-500x320.jpg
FCA chief executive Andrew Bailey

FCA chief executive Andrew Bailey has said that low interest rates may be putting people off seeking financial advice.

In a speech at Mansion House, Bailey said that the provision of advice was a “major area of attention” for the regulator, and that it was “crucial” given consumers now have more choice over what to do with their savings.

While he praised the RDR for removing product biases and improving professionalism, he said that too few people were accessing advice, in part due to the low interest rate environment.

Bailey said: “I would submit that both of these outcomes were sensible.  Were there other outcomes?  Yes, and I am quite prepared to recognise that there are concerns about a gap in the advice market. I think that gap is probably exacerbated by low interest rates, which mean that the cost of advice looks less favourable when compared to returns. And this probably has more of an effect in areas where the fixed cost of advice – which is inevitable – looks unfavourable relative to the smaller amount of investment involved.”

The FCA is independent of Government. However, The Bank of England, which sets interest rates, oversees prudential regulator The Prudential Regulation Authority.

Bailey said another priority was building on the Financial Advice Market Review’s recommendation to clarify where advice ends and guidance starts.

He said: “It is important that we do all that we can to provide clarity on the boundary between advice and more general guidance. I strongly agree that the more uncertain the boundary, the more advisers will rationally aim to keep away from going nearer to it, something that is not helpful.

“My commitment is that the work on this important issue will go on until firms can operate successfully to the benefit of consumers using common sense and good rules of thumb.”

Recommended

11

Tyrie gets City backing to be new FCA chair

Former Treasury select committee chair Andrew Tyrie has the backing of key city figures to become the FCA’s chairman next year, according to reports. Current FCA chair John Griffith-Jones announced in July he would be stepping aside next year when his five-year term comes to an end. A number of directors at asset managers, banks […]

Business-Corporate-Board-Room-Meeting-Hire-Hiring-700x450.jpg

Pimfa chair Ingram steps down from board

Ingram will be succeeded by Lord Debden, who was previously Apfa’s chair Former Wealth Management Association chairman Tim Ingram has stepped down as chair of the Personal Investment Management and Financial Advice Association board. According to a Companies House filing, Ingram’s position was terminated as of 19 September. He formally stepped down from his Pimfa […]

Charles Stanley pursues DIY investors with multi-asset range

Charles Stanley is extending its research and asset allocation ideas to a wider market with the launch of five risk-profiled multi-asset funds for DIY investors. The funds will invest in funds across asset classes, regions and markets and direct into UK stocks and bonds. It will be available via the wealth manager’s retail investment platform […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Oh my word …..

    Quite the opposite in my case, having a low interest rate has made my clients seek more advice than usual.

    He uses the word probably a lot, i wonder if knows what the hell he is talking about ?

    Probably not !!!

    • I do apologize for being a bit premature this morning by hitting the submit button.

      I was meant to finish by saying, people are not seeking advice because its to bloody expensive…….. its too expensive 1) because of belt, brace, and straight jacket regulation 2) because of expensive regulation, and levies.

  2. paolo standerwick 5th October 2017 at 8:58 am

    Never heard such tosh!

  3. My experience is the exact opposite. Low interest rates have driven an increase in demand for advice.

    Good to know the regulator has his finger on the pulse.

    • Phil

      Exactly my thought. Dividend income now comfortably exceeds interest rate returns. I really don’t follow where Andrew Bailey is coming from. If he is referring to small savings pots, these people don’t generally seek advice anyway and in any case would be better keeping something in cash (as should everyone) irrespective of interest rates.

  4. I think he means ‘Returns’ not ‘Interest rates’. he is probably thibking of the low interest he is receiving from his humongous bonus in his bank account.
    If he doesn’t even know the correct terminology, what is he doing there?
    Words fail me!!
    Sometimes, if people think you are an idiot, it is best to keep your mouth shut so that you don’t confirm it!

  5. Whittington Dick 5th October 2017 at 5:04 pm

    Agree with every comment thus far. One despairs at the total disconnect from reality – “Hmmm, can’t think why I might need advice now that I’m getting 0.95% return on my Post office Income Bond!”. What Planet do they get these people from! Why do the FCA appoint serial superannuated buffoons? BECAUSE THOSE DOING THE RECRUITING ARE THEMSELVES ALL SUPERANNUATED BUFFOONS! ALL of this, and I do mean ALL OF IT, can only be Laid at the regulators door. It beggars belief. Here’s a clue: Cost, Cost, Cost, err, Cost and, err, let me think now…. COST! The assumption that fees are a panacea was, as usual with the FCA, miscalculated, misunderstood and misapplied. Properly regulated commission, contrary to popular lick-spittle brain washing – could have been sensibly regulated, used and controlled to help clients spread cost. FCA? Farcical Comedy Act! And I cleaned that up.

  6. Whittington Dick 5th October 2017 at 5:10 pm

    Me again – this all comes back to the insidious creeping disease of Robo advice for what they see as the great unwashed. Pronunciations from the ivory tower.

  7. Whittington Dick 5th October 2017 at 5:13 pm

    Me again, again. Just been to wash the foam from my mouth.

  8. Hmmm, you don’t suppose Mr Bailey that the following may have something to do with people being reluctant to seek out and pay for advice:-

    1. FCA levies increasing year on year WAAY ahead of inflation to fund ludicrous expenditures such as £60m to refurbish your new offices in Stratford,

    2. Skyrocketing FSCS levies because the FCA hasn’t done its job,

    3. An ever hardening PII market,

    4. No longstop against stale complaints,

    5. Relentlessly increasing compliance requirements to evidence suitability,

    6. The requirements to generate and issue reams and reams of bumpf, in which clients aren’t really interested and which they mostly can’t be bothered to read.

    No, of course not, couldn’t be. It must be low interest rates.

  9. Mr Whittington
    Spot on but I think you need a drink (or a cat)

Leave a comment