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 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.”