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Govt and FCA launch review to boost access to advice

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The Government and the FCA have launched a much-anticipated review of the advice market aimed at improving access to advice.

The Financial Advice Market Review will explore what kind of support consumers want access to, whether any advice gaps exist, how they can be closed, and what role technology such as robo-advice could play.

There will also be a separate consultation on the role of publicly-funded guidance, including Pension Wise and the Money Advice Service.

The review was first announced in August and the consultation will run to 22 December.

A final paper is expected to be published ahead of the 2016 Budget.

The review is being jointly led by FCA acting chief executive Tracey McDermott and Treasury director general of financial services Charles Roxburgh.

City minister Harriett Baldwin says: “Helping hard working people achieve their aspirations at every stage of their lives is at the heart of our long-term plan.

“A key part of that is making sure people can access high quality, affordable, tailored advice and guidance to help them make informed financial decisions, whether that is saving for their first home, taking out a mortgage, buying a car, or saving and investing for the future.

“That’s why we’re exploring what more can be done to make sure consumers can access high quality and affordable advice so they can make informed decisions with their hard earned money.”

McDermott adds: “The financial decisions people make can have long-reaching effects. It is important the market provides accessible and affordable advice when people need it.

“The review is a chance for the FCA, Government, industry and consumers to work together to ensure we can deliver a market that meets this need.”

The review will also take input from an expert advisory panel chaired by former Scottish Widows Nick Prettejohn, which will include 12 to 15 industry experts from financial services providers, advisers and consumer representatives.

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. So how will Linda Woodhall’s defiant proclamation that “there’ll be no loosening of regulation” fit in with all this? That must surely be a pretty major spanner in the works of what this review is intended to achieve.

    As for “informed decisions”, firstly I’d thought that advisers aren’t permitted to allow clients to make their own decisions. We have to make a definitive recommendation, otherwise we’re just order takers which the FCA has made plain that it doesn’t like. So, are consumers to be empowered to make their own decisions or are they not?

    Secondly, isn’t one of the main problems for consumers such colossal quantities of information that making a decision is completely beyond them? How many times are they so completely overwhelmed by it all that they just say: I don’t know — what d’you think I should do? That’s the way it works in the real world, is it not?

    Apart from regulatory costs, it’s the costs of comparing and contrasting on every conceivable parameter every potentially suitable option available that makes the advice process so discouragingly expensive. Understandably, people won’t pay for what they don’t perceive they need. They want simplicity. When I take my car to the garage, I neither need nor want (nor want to have to pay for) an hour’s consultation with the chief mechanic explaining what he proposes doing. I just want him to get on and do it. If the engine seizes because he’s drained the oil and forgotten to replenish it or if the vehicle crashes because he hasn’t fixed the brakes properly, he’s liable, but that’s all I want and need to know.

    As I’ve written many times before, the needs of the great majority of people could be met by a simplified/ streamlined advice process based on just Proposition, Costs, Risks and Tax considerations, with a BRIEF summary as to suitability by comparison with a range of alternatives. It wouldn’t be perfect — what is? Certainly not what we have at present, hence this review — but it would at least free up the present advice log jam and break down the present barriers to access.

    The review also needs to ensure that signed disclaimers of liability against advisers are binding, so that we’re protected against clients who wish to pursue a course of action that may not necessarily accord with what we’ve actually recommended and who then change their mind at a later date.

    And then, of course, there’s the perennially festering sore of the FSA having arbitrarily ripped away the protection of a longstop which the FCA is plainly opposed to restoring (though it’s not had the decency to say it straight out), despite repeated representations from the likes of APFA.

    There is much ground to be covered, though I sincerely doubt that much of it will be unless the Treasury takes the lead, formulates its own decisions as to what’s needed and imposes unequivocal directives on the FCA. This, we hope, may well be its true agenda, given that without the intervention of the Treasury, we can be pretty certain that this review would never have come about.

    • Julian,
      You are so right in eveything you say, and I am certain that the vast majority of hard working, responsible Advisers will agree with you.
      My main concern is that our collective knowledge and experience in the ‘real world’, be drowned out by less knowledgeable commentators (what has any life assurance company ever known about advice and client cominications?), and the bully boys at the FCA who will once again, try to obfiscate and confuse, in another attempt to avoid facing up to the real issues, where yet again their clear lack of leadership and true responsibilities will fail to make any clear and everlasting decisions.
      Many Advisers are now fearful of giving advice, simply because the FCA rule book is unintelligible, particularly when considered within the context of confliction with COBS, Miffid and Perimiter Guidance, and with the prospect of a looming FOS, armed to the teeth with bias and retrospection, will make awful decisions that will fall more and more on to the FSCS, and eventually no PI Insurer will be interested….
      We are in a viscous circle of fiscal incompetence that will very shortly render the Advice sector impotent.

  2. The review must take into account the many errors made by the FCA/FSA such as RDR, such as lack of a longstop, such as execution only/non-advised/guided/advised, such as the pigs ear that is the determination of ‘independent’, such as the outrage that is the FSCS charter to steal.

    The fact that the head of the committee is effectively judging her own organisation leads me to believe that it is yet another sham consultation where the end result is a cost to the consumer and few rule chanegs that cut no ice and a big smile of satsfaction for another job well done.

    Me a cynic?

  3. #Julian Stevens – a very sensible analysis. It is to be hoped that those in influence start reading and acting on such blogs. Political sound-bites apart, these “hard-working people” will only be able to make informed decisions with their “hard-earned money” if the process itself were not so hard. Btw, Tracey McDermott came very close to complimenting independent financial advisers on their progress to professionalism during this morning`s “Today” programme: I nearly choked on my Ricicles.

  4. What it all comes down to is that advice cannot be made more accessible unless the intolerable and endlessly-increasing burdens of regulation are lightened. The very use of the word loosened (as opposed to lightened) has, in true FCA fashion, been chosen quite deliberately to imply that advisers are seeking an easy ride that will allow us to cut corners and thus make a quicker, easier buck from everything we do. That’s exactly the sort of fundamentally prejudiced attitude that’s led us to where we are now.

  5. We might well dub this the Radical Regulation Review (RRR) to sort out at least some of the bigger problems caused by the FSA’s RDR.

    Douglas Baillie ~ D’you not mean a vicious circle? Then again, given that formulating and documenting advice these days is like trying to swim through treacle, the word viscous may well be appropriate.

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