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FCA: When consumers think self-serve is advice and why some don’t trust advisers

The FCA has published findings of behavioural research into customer perceptions which reveals widespread confusion over what constitutes regulated advice.

As part of its wide-ranging reviewing of non-advised and simplified advice sales, the FCA polled consumers on perceptions of non-advised investments.

The review, conducted by NMG, found that when non-advised transactions took place only online, consumers recognised it was not advice. However, when a meeting or phone-call took place, they felt they were getting personalised advice.

The research also says some consumers don’t take advice because they think advisers are biased, untrustworthy and expensive.

The report reads: “Participants were clear about the scope of service from non-advised platforms and providers when an online channel was being used. However, when there is a degree of human interaction there is potential for information provision or guidance to be misinterpreted as advice.

“Participants sometimes confused information provision or product guidance with advice. In situations where the participant had spoken to a product provider representative, it was sometimes felt that a particular product had been suggested to them. This is particularly the case where face-to-face interaction was involved and where a product choice had been narrowed down for them. The ‘personal’ element of the interaction is what appears to drive the confusion.”

It also notes that, although consumers that had human interaction described the experience as ‘advice’, they were unclear on what the term really meant.

It adds: “The situation is compounded by the fact that what ‘advice’ means to a consumer can be very different to what ‘advice’ means within the industry. This was seen in a small number of cases where participants were uncertain if they had received regulated advice but, when probed, confirmed that they had not paid a fee or received a tailored recommendation.”

The research describes the confusion between advised and non-advised routes as a “concern”.

It recommends that services should be “clearly labelled at point of purchase as non-advised; this is particularly relevant where human interaction is involved to help avoid any ambiguity”. The research also found a “degree of cynicism” toward advisers among self-serve customers.

The report says: “There is a sense that non-advised investors believe they can do just as well as an adviser, without the cost or fear of bias that is evident.”

It lists a set of common concerns about advice, which include: the perception that advisers can’t “know the future”; advisers can’t help choose products from the whole of market; advisers may be restricted to a “preferred set” of providers; and advisers may take too much risk with clients’ money.

The research also says consumers link regulated advice with independence and whole of market research.

“Regulated advice is strongly associated with independence and access to the whole of the market,” it says. “Another key distinction is that regulated advice is, as it clearly states, regulated, and therefore provides safeguards for consumers.”

The consumer research involved 48 face-to-face in-depth interviews with consumers. Interviews took place between the 5th and 24th March 2014.

All had purchased on a non-advised basis since January 2013 and half had previously taken advice. 



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