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FSA simplified advice guidance delayed

The FSA has delayed its simplified advice guidance and will only now commit to publishing it later this year.

In March, FSA chief executive Hector Sants told the Treasury select committee the regulator was committed to publishing a paper on simplified advice by the summer. He was responding to concerns from MPs that adviser firms and providers did not have enough guidance on the regulator’s view of simplified advice services ahead of the retail distribution review deadlines.

Sants told the committee: “We are committed to publishing a further paper in summer, or earlier if we can, in which we hope to give firms the certainty they need in respect of the regulatory questions to enable them to deliver the service.”

An FSA spokeswoman now says the guidance will be published “later this year”.

The FSA has previously stated there was no need to delay the RDR if its simplified advice regime was not implemented until after January 1, 2013.

The British Bankers’ Association and the Association of British insurers have both been heavily lobbying the FSA to introduce a simplified advice regime. Last year, the FSA indicated that advisers operating in a simplified advice environment would not need to obtain QCF level four qualifications.

Earlier this month, the FSA delayed its decision on whether to ban cash rebates paid by platforms to clients and payments between providers and platforms and is expected to publish a guidance consultation on legacy commission later this year.

Barretts Financial Solutions senior partner Kim Barrett says: “This is extremely frustrating. The FSA is dragging advisers through radical changes and yet it is the regulator that is not ready for them.”

Concept Financial Planning managing director Paul Richardson says: “Clarity on simplified advice should have been published already. The FSA has not recognised how important this issue is.”

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Comments

There are 15 comments at the moment, we would love to hear your opinion too.

  1. Not THAT simple, then?

  2. Just another item to add to the list of failures of not just ‘the regulator’, but he who must take responsibility and become accountable – but will he??

    A disgrace to state to a select committee as was and then casually fail. Stand up and be counted Hector as you expect us to do every working day of our lives. Have you no shame about everything you fail to achieve???

  3. This is so important, yet we seem to be having some heel dragging going on. I am most concerned that “ordinary people” will be scared off by the concept of fee payment after RDR, but we do not yet have a viable alternative. This issue needs to be addressed – quickly, so that we know where everyone stands.

  4. Simplified advice is too complicated for the FSA. What a surprise.

  5. “Concerned” – you should be terrified. I have worked in the ” Fee Market ” for mortgage advice for a good number of years now. The only way I get my Fee is by “irrevocable ” mandate to solicitor and even then its a fight. How you going to get your fee for a pension transfer? Don’t think you will, and how are you going to make up for the lost income?, don’t think you will….
    For too masny brokers/Ifa’s the wake up call is too late

  6. As I have mentioned before in another article, they have not signed off CII to sign off the GAP Fill to become Level 4, which to me does not seem a big thing. So how can we expect them to do the bigger things, like Platform stuff, Simplified Advice, TCF-RDR, regulate Banks, stop Equittable Life falling over, growth of ex Building Societies into areas they could not manage or sustain. Perhaps the TSC should explain Decisions and Detail are interconnected, otherwise a timescale with only a Decision, is not effective, unless the Detail has the same timescale.

  7. Boy am I exasperated….

    Simply exasperated I am…

    Does “Simplified Advice” involve “Simplified Regulation”?

    Not according to the regulators!!

  8. The definition of simplifioed advice should be simple !!

    what a naive comment – it actually means different things to different people.

    To me simplified advice means a client who does not seek financial planning, but seeks advice in an area of their own selection – for example “we have just had our firts child and need to arrange some family protection” so I will not tell them that I believe (if I do) that pensions are much more important – I will restrict my advice to helping specify the selection of policy and sourcing that spec of policy. I wuill make it clear that there may be other prioroties tha i may believe they should be considering or that I believe ar more important. and that my financial advice service is available for a fee. But I will respond to the brief that I have been given.

    Like most IFA’s i have attented various seminars on the RDR and some with an FSA “guest star speaker” – I have quizzed every one on the various qualities of sevrice an IFA can give, including my defintion of “simplified advice” – I don’t know if any of them understood the “simple” question I was asking as to how this would fit in under the RDR. The standard answer has been “we will have to consider tha and all will become clear as the deadline approaches”. Clearly clearl has a new definition – as clear as mud !!.

  9. Instead of the FSA calling this the simplified advice and guidance, why does the FSA not call it by its real name the Bankers Charter to rip people off!

    Large insurance companies and banks have been responsible for the line share of complaints but the FSA is continually trying to come up with so-called opt outs of the RDR process for these organisations. So what will be left with is banks selling more a more structured products by sales people posing as financial advisers (no change there then).

    I recently published this on another money marketing piece and I think that this is relevant to this conversation as well:

    The only thing I want to know is why is it, that it is always a small mortgage broker or IFA practice that gets banned for life and a prison sentence, where are the Bank Directors, who have been caught managing firms that have been giving wrong advice and in some cases arguably fraud on a mass scale. PPI insurance mis-selling is going to cost the financial services industry an estimated 3 billion and that’s the people that actually claim.

    Isn’t it about time that the FSA starts to regulate financial services properly and treat all financial services firms in the same way and that includes prosecuting Bank Directors when their firms are found to be breaking rules or clearly found doing things wrong.

    At present all Bank Directors seem to have immunity from prosecution, as they always have the defence that they are too far away from the individual responsibility. If a firm is so big that those Senior Directors and Executives cannot take responsibility for what happens under their watch then surely that firm is too big and should be broken up.

    Massive bonuses comes with massive responsibility and if you can’t take responsibility for your organisation’s mistakes then you should not be in the job.

  10. Having attended a seminar by the FSA many advisors were miffed at the thought that you could have simple advisors and more complicated advisors operating out of the same business.

    They have finally realised that the bulk of people do not all need complicated advice but as someone previously has said, a plan/product/bit of advice to cover what their specific issue is.

    However, the FSA have not got a clue as to how that is to be delivered hence the stalling.

    The insurance companies and banks must be hating this as it is not going to give them time to prepare their onslaught onto the market.

    What a cruel world!

  11. I am disappointed by this news. It is only disappointment because I did expect this to happen.

    Simplified advice is a difficult subject to tackle, as it drives the question ‘what do you cut out of an existing advice process?’ If you publish the answer to this you end up creating a two tier assessment of suitability and defining the base line for all advice (whether simplified or not). Therefore the regulator is caught between a rock and a hard place. This, of course, is of their own making as they should not have thrown simplified advice into the RDR CP papers without much further thought on what it was supposed to do.

    As the RDR drives current IFA’s out of the profession and those remaining up the wealth tree, middle England will be both priced out and disenfranchised from accessing financial advice.

    I believe in full financial advice and the IFA model, but hand on heart how many full IFA’s have not dealt with simple, single needs that meet the essentials of many peoples financial planning? There is a need for simple financial advice for straight forward needs, however the devil is definitely in the detail. An adviser ‘can’ do it now under the current rules and it is called focused financial advice.

    As Nick Cann CEO of the IFP said in a recent webcast on simplified advice, the RDR’s initial principles of greater access to financial advice have been seriously compromised.

    Something has to give to ensure that all levels of the UK population can access some form of suitable service that meets their needs. I am afraid we will all have to wait again for the FSA, but I feel that I am going to be disappointed again when it does arrive…and again not surprised.

  12. For once I’m glad that the FSA are taking the time to decide what to do next.

    To date the FSA have mistakenly focused soley on complex advice which is in reality a very small part of the market. Very few clients need and are willing to pay for complex advice and yet they have a clear need for simple protection and savings.

    I think a case can be made for much of the advice currently being given to be classified as simplified (
    and that if RDR is going to work then simple products need to be available for those who will never deal with anyone charging typical IFA fees.

    One of the problems with transparency is that the buying public may finally understand that advice is not free but it does not follow that they will be willing to pay the amounts that many would demand.

  13. No, it is not going to give us in the life industry enough time because while RDR is going on so is Solvency II, and not the first time the FSA has fudged simplified advice

    Now all is well for Bob and the very rich customers that can afford advice, but what about everybody else who should be entitled to a decent product from HM financial services. I hope we are given the chance because what I see is a disaster looming for the life companies as well as IFA’s as a result of RDR which helps nobody. Mind you after Stakeholder, Sandler CTF etc.. why would any product provider want to manufacture any thing in the UK when in a few years time the regulator will rip it up?

  14. From what I’ve seen, the banks and building societies have for decades been operating on the basis of simplified advice, i.e. the shortest possible route to the sale of this month’s favoured high commission product. This is usually a 5 year onshore Life Assurance Bond investing in yet another brand new Managed fund with no track record but a capital guarantee at maturity and upwards of 6% commission (twice that commonly available from Collectives). Okay, the high commission part of the equation will be tougher after 2012, but somehow or other they’ll probably find a way round it.

    The (always post-sale) letters of recommendation are patched together so as to ensure that the client’s “needs and objectives” fit the product he’s already been sold. And what’s the FSA doing about that? Nothing that I can see.

    Perhaps before opening another can of worms by trying to cobble together yet another branch of advice, the FSA could more usefully take a good hard look at those we already have, not least the partly-tied and partly independent propositions offered by the likes of SJP. The scope for misrepresentation is obvious, yet still I recall David Severn’s party-line declaration that polarisation was “past its sell-by date” ~ complete and utter tripe if ever I heard it.

    But the problem for the FSA is that restoring polarisation would highlight the severe limitations of what the banks have to offer, which isn’t advice, it’s just product flogging. If quality advice is of such obsessively over-arching importance to the FSA, why are bank product floggers allowed to call themselves advisers? They’re not.

    And so the fudge continues. All in the name of “improving consumer outcomes”, of course, and what a perverted and corrupted ideal that’s become.

  15. You couldn’t make it up could you?
    Every deadline is …..dead…. for the FSA
    Every significant deadline for the hardpressed advisory community ‘aint’.

    A bunch of incompetent, dithering, feckless, waste of space pillocks.

    Anyone got access to a brewery to see if these jokers could organise a p…up.

    errrr , on second thoughts forget it; bad idea.

    How about cleaning a public khazi?

    You can just see the crew can’t you….err which end do we hold the brush?…. we just can’t decide…. it’s all a bit complicated.

    I’ve seen more intellectual purpose in the eyes of a group of chimps poking around for termites in a rotting log.

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