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FCA commits to further work on advice gap

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The FCA has committed to carrying out further work to address the gap in the provision of advice to lower-value customers.

At the FCA’s annual public meeting today, outgoing chief executive Martin Wheatley said: “We know the RDR has not solved all of the problems and further work is needed.”

Responding to a question from Money Marketing, Wheatley said the advice gap is the most significant issue.

He said: “The RDR has certainly removed product bias and the industry has stepped up to the professional standards which has been a huge success.

“The gap is for the relatively smaller sized pots, as to whether – with all the liability that comes with giving advice – there is enough provision of service for those with simpler needs and less to invest. That’s the gap which we are committed to doing some more work on.”

The regulator said in December there was “little evidence” the RDR had resulted in an advice gap.

As part of its third and final post-RDR implementation review, it commissioned Europe Economics to review the advice gap.

The FCA concluded: “There is little evidence that the availability of advice has reduced significantly as a result of the RDR, with the majority of advisers still willing and able to take on more clients.

“However by revealing the true cost of advice, the RDR has led some consumers to consider the extent to which the advice they receive represents value for money, and in some cases conclude it does not.

“This group includes consumers who would be likely to pay for a cheaper form of advice, for example that which may be provided by a simplified advice model. We will continue to monitor the provision of advice going forward.”



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There are 13 comments at the moment, we would love to hear your opinion too.

  1. Aha. So it’s not the FCA’s fault, it’s ours for charging too much. Anyone would think that we were being undermined by having to pay for the provenly flawed MAS and soon to be discredited (if the mandarins comply with FOI requests) PensionWise. It’s like a bed bug doing more work on why you are uncomfortable at night without accepting that IT is the problem.

  2. Julian Stevens 22nd July 2015 at 4:57 pm

    They’ll be working on this ’til the cows come home and beyond. Listen you bozos ~ it need be no more complicated than Proposition, Costs, Risks and Tax with a brief summary of suitability. But, despite all the talk, you just cannot bring yourselves to facilitate anything truly simple, can you? Simple goes against everything you stand for.

  3. Agreed Paul. We have seriously flawed outdated regulation provided by outdated overpaid under-experienced regulatory staff. They are a shambles and cannot control their budgets or produce a sensible framework for us to operate in. The nub of the problem is that regulators have focused on the advisers and the delivery of advice rather than the product manufacturers themselves. The regulators work in wonderful offices in one of the highest rental areas for commercial property in the UK and get paid bonuses for doing a rubbish job and have us pay for their defined benefit pension schemes. MAS is fine for debt management but should be a publicly funded service. Pensionswise is a great idea but has not had the chance to be properly publicised or implemented yet. Again no idea why we should pay for it as advisers. Crazy

  4. I keep reading this stuff and just want to lie down in a dark room. Seriously, they keep hiking up our fee’s and levies and wonder why we need to charge more for our services. They’ve taken financial advice out of reach of so many in our society who just happen to be those that need financial advice the most.
    The regulator said in December there was “little evidence” the RDR had resulted in an advice gap.
    They’re not saying that now I bet…..

  5. Once more…It’s not about what we as regulated advisers charge just for ‘our’ time, it’s about the whole package (levies, business-related costs, PI insurance and more levies).

    Is simplified advice going to reduce any of this overhead or do away with the need for liability protection? NO!

    Tell you what though, I bet the banks can come up with something…And there we have it!!

  6. What we all need to do is include within our bills the % and actual cost of the direct regulatory fees. This will ensure clients are aware that THEY are paying for this “protection”. APFA will be helping in this area.

  7. Start again by considering what “advice” is and what it can offer the public. It isn’t and can never be an insurance against making the wrong choice. All it can do is enable a client make an informed decision based on their own circumstances. Let’s have a clear split of responsibilities. Advisers help clients to make informed decisions. The client makes the decision and advisers carry out the client’s instructions to the best of their ability

  8. Dominic Thomas 22nd July 2015 at 7:35 pm

    It would seem that only an expensive report by a team of experts would be sufficient to prove that I am breathing…. although I have to admit that on occasion, I do wonder if perhaps I have have swallowed the red pill [Morpheus]..

  9. Trevor Harrington 22nd July 2015 at 8:05 pm

    Right then you lot, all of you commenting above, do something constructive about your very valid and eloquently put points ?



    SHUT THE F—K UP ….
    (apology to those who are already members – x)

  10. Trevor Harrington 22nd July 2015 at 8:06 pm

    Just send Garry Heath (Libertatem) your money …. it’s only £240 squids … for heavens sake …. just do it !!!!

  11. So the RDR has not worked, the first real admission ! on the one and only measure, clients ability and willingness to pay,(and I stress this) out of their own pockets not from the money they invest !! which has left good independent advice exclusive for the wealthy.

    Yes you can argue its stopped bias, and raised professional standards, but these are just opinions.

    I would like to see the FCA make public exactly why advice is sooooo expensive !

    They know why, we know why !

  12. “However by revealing the true cost of advice, the RDR has led some consumers to consider the extent to which the advice they receive represents value for money, and in some cases conclude it does not”. That may well be true – but there are also those that just can’t afford it. Many individuals who have, say, £30 or £40 pm available for retirement planning – cannot afford to write a cheque for £500 minimum fee, or even £300 – and those minimums are likely to increase due to the massive increase in regulatory fees and PI premiums. The advice gap won’t close, it will get bigger.

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