The FCA will give guidance next month on what it will expect from advisers providing simplified advice in an effort help them target the mass market, but warns it must not be used as an excuse for misselling.
In a speech at Bloomberg’s headquarters in London this morning, FCA chief executive Martin Wheatley said next month’s guidance will help advice firms develop new ways of doing business without falling foul of regulations.
He called on firms to engage with the regulator on the guidance but said simplified advice must not be seen as a way to avoid regulatory responsibility.
He said: “This work shouldn’t be mistaken by firms as any kind of charter for either misselling or abdicating responsibility.”
In February, Wheatley told the Treasury select committee financial products can be sold online on an advised basis with no human intervention.
This morning he said technological advances like computer programmes that learn through experience mean computers are capable of “impossible feats of accuracy and forecasting”, opening up the possibility they could help fill the advice gap.
Wheatley said: “Likely to be included [in the paper] is the scoping work we’ve done into new models of automated advice, as well as feedback from consumer research, industry workshops, meetings with trade associations and so on.
“On top of this there’ll be guidance offering greater clarity to firms around the broad expectations for supplying limited or simplified advice. And there’ll be a question posed as to whether more sweeping change is required.”
Wheatley also admitted that the tick box approach of the past had sometimes led to consumers being flooded with information and said the regulator would give firms room to disclose to clients what they thought was necessary.
He said: ”To support this more ‘organic’ approach, if you will, we’ve agreed to grant waivers to product disclosures that don’t follow FCA guidance to the letter – if firms can work with us to prove they are better for customers. A sensible move I think and one that opens the door, potentially, to greater innovation around disclosure in future.”
Wheatley’s predecessor Hector Sants once told the financial services industry to “be very afraid” of the regulator. In an interview with Bloomberg TV after the speech, Wheatley struck a very different note, saying that firms should not be afraid to innovate.
He said: “We can’t let innovation and development be blighted by the fact we still have some scandals that we’re dealing with. We want firms not to be so scared of innovating and making changes in the industry that they won’t bring through the products that people need to save.”
In 2012, British Bankers’ Association chief executive Anthony Browne said banks are “frightened” of developing new products because of regulatory uncertainty.