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Govt pushes for ‘safe harbour’ for advisers


Treasury economic secretary Harriet Baldwin has called for a “safe harbour” to be introduced for firms as part of any reforms resulting from the Government and FCA’s review of the advice market.

In the terms of reference for the Financial Advice Market Review, announced in August, one proposal was to create a safe harbour or regulatory carve-out for certain types of advice.

The terms did not offer any more detail on how that would work in practice, but it is thought this would mean limited or no liabilities for advisers recommending approved products or behaving according to set guidelines.

Speaking at an FCA event on robo-advice in London today, Baldwin said fear of regulatory sanctions has held back UK firms from innovating in the past.

Responding to a question on why the UK has lagged behind the US on robo-advice, she said: “Perhaps one of the challenges in the UK is the fact we have had historic examples that have been regulatory scandals and it is that retrospective behaviour that I’m not sure has happened as much in the US.

“The fear of potentially doing something innovative that could down the road be seen as having been wrong is a key reason why it is so important to us as Government to involve the FCA in the advice review.

“What will have to come out of the review if there are to be changes is that if you follow these regulations that effectively that will be a safe space and a safe harbour for you for the rest of time.”

Baldwin added: “As the new technology comes onto the market we need to make sure the statutory landscape is appropriate, and that Government strikes the right balance between regulating the market and knocking down barriers to entry.

“In particular I’m aware that there are firms that have developed new cheaper models of advice but feel there are regulatory issues that prevent them from taking it to market.

“One leading company told us they wanted to enter the advice market online but to comply with current regulations their survey would have to ask 247 questions.”


Linda Woodall 700 x 450

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The FCA’s newly appointed advice boss has told a Labour fringe meeting that loosening regulation to encourage new players to offer advice “is not the right way forward”. Speaking on a panel at the conference in Brighton today, FCA director of life insurance and advice Linda Woodall said the watchdog should not reduce regulatory demands […]


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Robo-advice tools which allow firms to automate certain parts of the advice process are being tipped to take off in the UK. While much attention has been focused on the launch of algorithm-based investment portfolios, other models are being developed which experts say could help advisers to reduce their costs while retaining the human touch. But […]


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There are 14 comments at the moment, we would love to hear your opinion too.

  1. Wow. The importance of this should not be underestimated, it would be a seismic change to the way regulation works. Perhaps common sense and a dose of reality can win the day after all…

  2. Tim 30th September 2015 at 12:23 pm

    “Wow” squared… if it is possible. The problem (as highlighted recently by MM) is will MIFID II stop HM Treasury from imposing this change on a reluctant regulator?

  3. Grey Area, what it says and what the outcome is will probably be worlds apart.
    I have been in this business to long to think this is going to be good news.

  4. Let us all hope that this vitally important initiative gains all of the traction and support it deserves….

  5. OK but only with reform of FSCS levies. Otherwise there is little point because no-one can plan a business that can be asked at the drop of a hat for thousands and no big player will be prepared to invest when Mark Neale can steal all of their profit and pay it to the feckless.

  6. I don’t believe, having a “safe harbour” or as I would put an amnesty on liability for advice, is very wise at all, what we need is a reduction in the mountain of paperwork, reporting and above all cost !!

    If ? I should want to go to London for any reason, all I would do is get on the M40 at Oxford and away I go, I certainly wouldn’t go via Hull snarled in traffic and with extra fuel cost, then on my arrival get charged a emergency service levy for them attending an accident in Cardiff.

  7. Will this let the banks back in? I wonder if she is favouring her old employers and the wider banking community under the guise of being the IFAs friend.

  8. The banks will love this…

  9. But what body will approve any products? Certainly not the FCA. It doesn’t do approval (or due diligence), it only authorises. As it’s at pains to remind us all, authorisation should not be inferred to mean approval. Any intermediaries found to have recommended any product that subsequently fails are (after the event) judged by the FCA to have undertaken inadequate due diligence.

    Hence my suggestion that the FCA should outsource product due diligence to a panel of respected research and analysis firms, of which there are many. Simple. Trouble is, the FCA just doesn’t do simple.

  10. Banks have their place. Not everything they offer is toxic.

    Their return to the market is essential if we are to uplift the take up of protection products.

    Advisers have nothing to fear from their return and if they are enabled to offer basic & suitable products then society will benefit.

    • Over £100m in fines in the last 12 months and several £000’s of millions in consumer redress in the last few years would seem to undermine your position.

  11. Mrs Baldwin has got it ,she’s really got it. But this cant just be for Robo Advisers but all advisers. The key is FOS not the FCA. FOS has to sign up for this across all advice otherwise there will be no capital for Robo Advice or anything else.

  12. OK I have just had my first coffee of the morning – lets go really radical – what about advisers being in separate regulator, whose costs reflect our market not London Banking and who regulate in line with the low risk we present to the consumer! AdviserReg based in say Bristol?

  13. Be realistic Garry ~ The FCA would fight tooth and nail against any diminution of its empire or having to abandon its never-ending programme of identifying potential problems which, in the real world, don’t actually exist, with endless new rules, regulations and procedures designed supposedly to address them.

    Yet all these things are causing an ever widening advice gap, the adviser community in seemingly unstoppable decline and the obstructive effects of regulatory policy on issues such the difficulties so many people are now complaining about when it comes to exercising their legal rights to cash in their pension funds (wisely or unwisely). Regulatory policy is now in direct conflict with government policy and with the practical needs of providing advice at a manageable price. So, at last, the Treasury has stepped in with a review of the FCA, which it [the FCA] has, we’ve been pleased to note, failed to rebuff on the grounds that having been set up by an independent body it doesn’t have to answer to the Treasury. Oh yes you do, the Treasury has said, so you can forget about that one.

    There may be a glimmer of hope that the Treasury will knock a few heads together and finally force some much needed common sense into the regulatory framework, despite Linda Woodhall’s defiant declaration that there’ll be “no loosening of regulation” on her watch. Maybe she’ll have to eat her words.

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