The FCA says it does not want to stand in the way of progress when it comes to firms developing simplified advice models targeted at lower value clients.
At a Distribution Technology event in London yesterday, FCA technical specialist Rory Percival took questions about how advisers could develop a simplified advice service which met regulatory requirements.
Advisers said while they wanted to offer a simplified advice model for lower value clients, they had concerns about how to do so compliantly.
Percival said: “In this area in particular we want to understand what the issues are so firms can innovate. We do have rules about what is advice and what is not and we want to make clear what that means in practice. If we are preventing progress we want to unblock that blockage.”
The regulator is currently carrying out a thematic review on non-advised and simplified advice sales. Percival says the FCA will make clear the differences between advised and non-advised sales when it publishes its findings.
He also suggested some firms’ compliance concerns were holding them back from developing advice models unnecessarily.
He said: “There is a tendency in some cases for over-compliance. So that is an area that has cropped up and is a concern of ours. We sometimes see processes which are for processes’ sake. In some cases it seems costs have come from over-compliance.”
Lighthouse chief executive Malcolm Streatfield, also at the event, said advice firms should be able to offer some form of simplified advice with a view to building a full advice relationship later on.
He said there was a risk that if the industry did not find a solution for low-end clients that an “innovative technology firm is going to step into our space and start eating our lunch.”