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FCA: Advice market reform is ‘on track’

The FCA has said that its flagship review of the financial advice market last year is on track to boost access to advice after the pension freedoms moved the market on from the RDR.

In a document released today responding to questions sent in before its annual public meeting but it did not have time to respond to on the day, the FCA set out its stance on whether its strategy was building trust in advice and showing that it was good value for money compared to other ways consumers can get information.

The FCA noted that the RDR “has helped to raise standards in the industry and over time should help to build trust in financial advisers”.

In particular, it cited fee transparency and the removal of commissions as steps forward, and that the results of its recent suitability review, which showed that 93 per cent of advice cases were suitable, demonstrated positive results.

The FCA writes: “A market where advisers aren’t driven by commission and are better qualified will provide a better quality of advice for consumers.”

However, it adds that “the landscape has shifted since RDR was developed”.

Its Financial Advice Market Review published last year, which set to tackle barriers to accessing and engaging with advice on pensions, retirement income or investments, is progressing as planned, it added.

The FCA writes: “The introduction of pension reforms has arguably made it even more important that consumers get the help they need with financial decisions. FAMR, which was launched in 2015 in conjunction with the Treasury, was aimed at making the financial advice market work better for consumers.

“All the FAMR recommendations are either already completed or on track for completion on schedule.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Removal of commissions? Except for certain selected players, that is, whom the FCA seems quite content to allow to carry on much as they ever did, pre-RDR.

    Try as I might, I see nothing in this article articulating exactly what the FAMR has produced in terms of lowering the barriers to accessing and engaging with advice, the biggest one being cost.

    The FCA seems to be trying to claim that the RDR and the FAMR are on course to achieve an impossible combination of higher standards of compliance (with more and more rules and requirements) and lower costs. It can’t be done.

    And whilst the FCA’s claim that the RDR has helped to raise standards across the industry may be partially true, one has to ask why we’re still seeing boatloads of uninsured liabilities for mis-selling UCIS falling on the rest of us via the FSCS? The minority cowboy element of the adviser community has carried on largely as if the RDR never happened whilst, for its part, the FCA seems to be doing little if anything to stop them.

    The bottom lines are:-

    1. Good, thorough and thoroughly compliant advice can never be cheap and

    2. The FCA is still failing to identify, home in on and root out the rogue element of the adviser community.

  2. Hounded to almost extinction by the regulators the advisers that remain now face the onslaught of consumers needing regulated advice. So many enquiries not enough time or advisers especially concerning pensions, so basic economics apply, cost will rise. This upsets the regulator as they want everything completed cheaply, so they look good with the consumer, so start to apply pressure.
    Will the adviser survive? Who knows, one think is for sure, the specialists of the species are in the greatest danger, as the regulator procrastinates over what is and is not good advice surrounding Defined Benefit Pensions. PI insurers are becoming very afraid and looking to exit the market, but the regulator in true tradition will continue to look after itself and their future, allowing their actual food source to be priced out of business due to the week guidance, that allows them to look good with retrospective judgements when it goes wrong in the future.
    The really sad fact is the pray, the advisers have little defence, cannot hide, cannot apply pressure, as not even the Government can touch the regulator, they have no natural predictor, they have no accountability.
    How long do advisers have to shout, you cannot take five years to make your minds up, the consumer is in great danger and ITS HAPPENING NOW!
    Regulation fails mainly because it takes to long to act, means the FSCS costs are rocketing, but they can take their time, why, as they pass the bill on and are not accountable for their sloth like reactions.
    Just had our annual fees, the bill for the FSCS is now unacceptable. We tell the regulator, we report the dangers, in turn they sit back and take two years or longer to act, by which time we are facing a large bill for their failings and yet again the consumer suffers. How is this system seen as acceptable to consumers, Government, the industry the only body that believes its fair and works is the regulator.
    I wonder if the regulator would act faster if its cost were fixed and for every failing the sum paid to them reduced, I wonder if it could be shown they had been advised of the danger, having then taken three years to act, the cost came out of their budget, would they still sit back and wait?

    • What your post echoes, albeit in a somewhat roundabout way, is my own calls (and indeed those of others) for a regulator of the regulator. But nobody seems to be taking these up.

      As for taking two years or longer to act on the endlessly spiralling costs of the FSCS, I’ve yet to see any action, just talk, talk and more talk. The regulator has FAILED to put forward any proposals to tackle the root of the problem, namely the quantum of (primarily uninsured) liabilities falling on it. And the reason for THAT, I suggest, is that to do so the regulator would have to admit its own failings in terms of identifying and homing in on supposedly regulated advisers selling toxic junk without relevant PII cover.

      All the FCA has come up with so far are proposals to shuffle the deckchairs about in terms of how the total levy bill shall be apportioned. But I’ve seen no rationale to support suggestions that providers should pay a larger share of the overall FSCS levy. Other than those who sell their own products direct to the public, why should they pay into a scheme designed to be a fund of last resort for those who’ve suffered loss as a consequence of bad advice from independent regulated advisers?

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