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Treasury confirms new definition of advice for regulated firms

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The Government will change the definition of financial advice for regulated firms so they will only be giving advice when they provide a personal recommendation, a Treasury paper has confirmed.

The Treasury published its response to last year’s consultation paper on amending the definition of advice on Monday.

The change brings the definition in line with Mifid and will come into effect on 3 January 2018.

The Treasury says the current wider Regulated Activities Order definition of advice as “advising on investments” will stay in place for unregulated firms.

The definition change was recommended in the Financial Advice Market Review as a way to encourage more firms to offer guidance services without fearing they will fall under regulated advice rules.

The Government then confirmed it would consult on a “single, clear definition of financial advice” in the 2016 Budget.

In the Treasury’s document confirming the new measures on Monday, it says: “This means that regulated firms will be able to provide more advanced guidance services, that would previously have been caught by the RAO definition of advice as ‘advising on investments’, without being subject to the higher regulatory requirements associated with regulated advice.”

“However, unregulated firms will not be able to provide these more detailed and tailored guidance services. This dual approach mitigates the risk of consumers being scammed.”

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Comments

There are 7 comments at the moment, we would love to hear your opinion too.

  1. Something must be wrong. Common sense has prevailed? It’ll be more useful if they provided useful examples so firms can adapt their offerings.

  2. Dinosaurs like AVIVA and Phoenix will be rubbing their hands with glee…..
    I don’t really mind either way as I don’t think I will loose one single client as a result of these changes and will continue to take on as few as I already do…..

  3. I can see it now “we don’t give you advice we give you options” or maybe a less clear disclosure will prevail
    Until the public are aware don’t think we have moved forward much of at all

  4. “firms so they will only be giving advice when they provide a personal recommendation”

    “The definition change was recommended in the Financial Advice Market Review as a way to encourage more firms to offer guidance services without fearing they will fall under regulated advice rules ”

    Well that seems as clear as mud. Is this just poor reporting or the usual muddled thinking from the powers that be?

    So if an unregulated guidance person sais “I suggest you take out an ISA – full stop nothing else. What does this fall under? Or I suggest you keep £x in cash. Put more into your pension? All without mentioning a specific product. Clarity would be very welcome.

  5. So that’s clear then. “Regulated firms will be giving advice only where they provide a personal recommendation”. One of the key benefits of the new definition apparently is that “firms will be able to give more tailored information and guidance to better serve customers”.

    But how do you “tailor” guidance without making it “personal”? Maybe by showing consumers what “people like you” do? I’m afraid not – that would apparently constitute an “implicit personal recommendation”!

    I foresee more semantic debates ahead…

  6. Blue Eyed Monster 28th February 2017 at 4:59 pm

    Seems to suit the Robo’s, company reps etc or indeed anyone who can say “here is what I would do – but of course this is not advice!
    If it is not on paper, it did not happen, and so the sale can be made without responsibility. and the client has no protection.

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