Reviews of the Retail Distribution Review and the Financial Advice Market Review will be conducted jointly with the Treasury and under the FCA’s appeal to investigate ongoing concerns in the advice market.
The call for input will consider whether the initiatives for customer protection and best practice outlined by the RDR and FAMR have been successful in achieving their initial objectives.
Twenty-four questions relating to the effective functioning of the industry (included below) have been presented.
The FCA says: “Consumers can struggle to assess the cost of advice and may overpay for services which they do not need. We have some concerns that, in particular parts of the industry, there may be problems with conflicts of interest, poor treatment of consumers and misleading or conducing communications.
“The market is dynamic and has evolved considerably since initiatives were introduced. We will therefore assess the market to consider whether it is meeting consumer needs now and will do so in the future.”
The regulator published its first post-implementation review of the RDR five years ago, concluding there was proof that advisers were actively raising their levels of qualification and that product bias and charges had been reduced.
The implementation also found that quality of advice had improved but cost of advice, and subsequently the advice gap, had risen considerably.
The FAMR’s initial review came in 2016 and included 28 recommendations for the FCA and the Treasury.
It was met with mixed reviews by the industry, with many stating it had failed to directly identify the industry’s grittiest issues.
Aegon pensions director Steven Cameron says: “There has been disappointingly little practical change and no real sign of the advice gap reducing. The emphasis now needs to return to facilitating more people receiving advice.
“FAMR recommendations were also designed to make advice more accessible through the workplace, however employers continue to struggle to understand what they can and can’t offer without crossing into regulated advice.”
The regulator now says its specific focus for the full review of the market will be to reassess consumers wants, and to decipher upcoming market trends that could affect “future development of advice and guidance services.”
The future of robo-advice is highlighted in the questions, with the FCA asking for views on whether current regulation supports its development and whether it can be improved.
FCA executive director of strategy and competition Christopher Woolard says: “The aim of the RDR and FAMR was to help the market develop the right advice or guidance service consumers need to make those directions.
“It’s important that our work looks ahead to see how we ensure that this important sector works well in the future.”
The call for input is open for feedback until 3 June and a final report on findings is expected later this year.
The FCA says: “Over the course of 2019, we will conduct research with the industry and consumers to gather data to inform our work.
“If we identify problems in the market, or ways to improve advice or guidance services, we will consider how best to intervene.”
The FCA’s questions
Is there any other evidence we should consider in our
review of the RDR and FAMR outcomes and indicators listed?
How do different groups of consumers access
appropriate advice and guidance? Does this vary by
financial need or consumer group?
Are there any barriers to consumers accessing advice or
guidance that meets their needs or to firms providing
Do consumers have the right information to compare
advice and guidance services and to shop around? How
easy is it for them to compare services?
What barriers exist to making advice or guidance
services more affordable?
Do advice and guidance services offer sufficient quality
and choice to meet the needs of different consumer
groups? Are any consumer groups underserved?
Do consumers have confidence and trust in advice and
guidance services and do these services address their
Do consumers who take advice or use guidance services
get better outcomes than those who do not? If so, how,
and if not, why not?
What are the key advice and guidance services offered in
the market and do they meet the needs of all consumer
What new business models are being developed and how
will they meet consumer needs?
What aspects of advice and guidance services do
consumers value and why? Does it vary by consumer
group or financial need?
What emphasis do consumers place on the cost of
advice and guidance, against other elements of value for
Are there any barriers to effective competition between
firms offering advice or guidance?
Are the rules and guidance around advice and guidance
Are there points where the regulatory system may drive
too many people to seek advice?
Does regulation support the development of advice and
guidance services, including automated advice services,
that work well for firms and consumers? How can it be
Did FAMR or the RDR result in unintended consequences
that have caused consumer harm?
How have consumer needs for advice and guidance
services changed since the RDR and FAMR initiatives
Are there any new or emerging trends (for example, the
ageing population and increased pension flexibility) that
will lead to further changes in consumer demand for
advice and guidance services?
What changes to the market might be needed to
encourage consumer interaction with, and good
outcomes from, advice and guidance services in the
What market developments have taken place since the
RDR and FAMR reviews? What impact have these had on
consumers, the market and competition?
What future market trends do you expect to see and
what do you expect their effects will be?
What opportunities and barriers are there for developing
advice and guidance services in the future?
What emerging risks to consumers do you see in the