Lansons says the industry should have engaged with the Government on simplified advice rather than the FSA and insists it is not too late to have simplified advice considered under the draft Financial Services Bill.
Lansons public affairs and regulatory consulting director Richard Hobbs says simplified advice was never viable under the current regulatory framework because the thin margins would not compensate advisers for taking on the same regulatory risk as full advice.
He says: “The key problem is the trade bodies held their dialogue with the wrong party because its origins were in the retail distribution review. Instead, they should have engaged with Government. The Government could then have explained to the FSA what was wanted. In practice, the simplified advice issue is bigger than FSA rules; the issue requires a different approach.
“It is not too late to redirect this dialogue to the proper quarter. The draft Financial Services Bill is currently undergoing pre-legislative scrutiny. It includes provisions to re-task the new conduct regulator. It is not too late to change it.”
Institute of Financial Planning chief executive Nick Cann says: “It is not for the FSA to sort out but I am not sure if the Government is the right body to sort it out either. It is more important that the industry talks about what such a system could look like, which could then be presented to the regulator.”