The Institute of Financial Planning has hit out at the regulator’s “outrageous sweeping statements” about who should access simplified advice and questioned whether the regime will be profitable for firms.
In its simplified advice guidance consultation, published last week, the FSA says firms should not recommend retail investment products through simplified advice if a client has basic protection needs that are not being met, would be better off paying down debt or does not have access to adequate emergency savings.
IFP chief executive Nick Cann says there will be people who want to save or invest for the future before they pay down existing debt.
He says: “Many people who have what I would call ordinary debt want to try and save for the future or invest in different things. To say those people should not do that shows we are not really engaging with the customer.
“It is outrageous to make sweeping statements about how people should set themselves different goals and objectives.”
Cann believes that as simplified advice will carry the same compliance costs as full advice for providing documents such as fact-finds and suitability letters, simplified advice will offer little profit margin.
He says: “What the FSA is saying is it has come up with a suggestion. The difficulty is that under the current regulatory rules, the suggestion means a business cannot deliver that sort of service to make any money.”
Thameside Wealth director Tom Kean says: “This guidance adds more confusion to an already confused marketplace. Simplified advice sounds like it is anything but simple.”