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FCA kicks off thematic review into non-advised sales and simplified advice

The FCA is asking firms to provide detailed information on business models, product ranges and governance and controls as part of a thematic review on non-advised and simplified advice investment sales.

The regulator has written to a sample of 14 firms asking them to supply information for the review ahead of onsite visits to be conducted in January and February 2014.

The letter, seen by Money Marketing, says the review will focus on firms’ business model and distribution strategies, their investment propositions, the customer interface through which sales are made and governance arrangements.

The letter says: “Following recent growth in non-advised and simplified advice investment sales, the FCA is undertaking a thematic review to examine these distribution channels in more detail.

“In line with the FCA’s new approach, we want to take an early look at whether non-advised and simplified advice models are delivering good outcomes for consumers.”

The FCA is requesting information on simplified advice and non-advised services separately.

Firms are requested to provide details of the business model and strategy for the service, its target market, and the rationale for the type of distribution channel and customer interface used.

The regulator is also asking for an analysis of potential risks of the service to its target market and how this was factored into its design and implementation. 

On product ranges, the FCA is asking firms to supply their rationale for the product range included in the service, and the process for compiling any ‘best buy’ product lists and wider investment research provided to clients.

On customer interfacing, it is asking for pre and post-sale disclosure provided to customers, training and supporting material provided to staff interacting with customers, and copies of all financial promotions sent to existing and potential customers in the last three months.

Finally, on governance and controls, the FCA is asking for complaints data for the last six months, details on the identification and management of potential conflicts of interest, and details of any distribution deals with providers or distributors. 

Firms are required to submit all of the information to the FCA by 3 January. 

FCA technical specialist Rory Percival warned in April execution-only services could be subject to advice rules if the customer believes they have received advice, and that the regulator would look at the issue as part of a thematic review of non-advised business this year.


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There are 6 comments at the moment, we would love to hear your opinion too.

  1. I suspect this will send a shiver down a few people’s spines. However, this was bound to happen at some point. I do suspect that there will be very few firms, for them to select a sample of, which are offering simplified advice

  2. When this report comes out and the FCA say ‘simplified advice is fine and non-advised sales are fine’ just watch the banks jump straight back into the market! They have been watching and waiting for this and does anyone think for one second the banks aren’t going to come back into the market?

    The banks have been selling ‘non-advised’ PPI for years and the FSA (god bless them) stopped this with RDR, but they want and NEED another in and this will be it.

  3. Looking forward to the FCA investigations. I cannot understand why a money portal or online sales site should be paid money to offer non-advice sales. They should have to have full disclosure of how much they are receiving with lots of warnings stating that the client should seek Independent Financial Advice before proceeding. I have heard of Online Companies selling Annuities and Life Cover, both allow the clients to select what the clients want. The client therefore may be purchasing a product which is totally inappropriate for their needs and this needs to be pointed out to them.

  4. Non-advised sales are what I understand SJP is into. “If I were you I would buy…..”.

    I just cannot believe that when there is an interface between a sales person and a customer that no advice takes place.

    Non-advised to me means direct off the internet without any human input on the sales side – same goes for postal purchases.

    As for simplified – there ain’t no such animal. Life is complicated and financial products are mega complicated for the general public.

  5. I agree with Matt. Watch this space. as soon as the FCA says it is OK there will be a rush to do this and then next thing it will be one Lvl4 team manager and at least 5 level 2 or 3s to deliver the “simplified advice”. Much cheaper in theory than those of us who have been forced to get our lvl 4’s and those who have gone on to lvl 6, but I bet the cost to the consumer will be HIGHER than those with their lvl 4 an 6’s.

    anyone noticed that the recording on NatWest phone calls says they don’t give advice, only information now…… for you to make an “Informed Choice”. martin B should have trade marked the words 🙂

  6. What is the ‘simplified advice’ model that the FCA is investigating? I was under the impression that sales were wither advised or non-advised.

    Certain companies have been treading a very thin line between advised and non-advised sales. The FCA really needs to look at whether or not the clients themselves feel that advise was given and not rely on these companies arguing the toss.

    I believe that the above comments are correct, it is only a matter of time before the banks figure out a way of getting back into the advice market. If the FCA doesn’t open the door for them in the near future then the banks will lobby the FCA until the rules are changed to allow mass market offerings to be profitable.

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