The Treasury has not conducted an estimate of how many more people are likely to go to advisers under its planned new definition of advice.
The Treasury is currently consulting on plans to amend the definition of advice so that consumers only receive regulated advice when they are offered a personal recommendation for a specific product.
The consultation was recommended by the Financial Advice Market Review and is intended to align the UK’s definition of regulated advice as “advising on investments” as set out in the regulated activities order with the EU’s Mifid rules.
Responding to a Freedom of Information Act request from Money Marketing, the Treasury said though it had not made a formal estimate, changing the definition was unlikely to have a “material effect” on the number of people looking for financial advice, but would increase the number who have access to guidance.
The Treasury said: “We did not conduct an estimate of how many individuals would seek financial advice under the proposed definition (Mifid) compared to the current definition (RAO). This is because we consider it unlikely that changing the definition will have a material effect on the numbers of individuals seeking financial advice, but, as discussed in the consultation on amending the definition of financial advice (currently open), will have an effect on the number of individuals able to receive financial guidance.”
The Treasury pointed out a number of potential costs and benefits from the change in its consultation paper.
These included the potential need for advisers to change internal systems and processes as well as external communications, offset by reduced compliance costs for firms needing to check their guidance does not stray into advice.
In its FOIA response the Treasury said it had yet placed a value on the potential down or upsides from the change.
The Treasury said: “We did not conduct a cost benefit analysis to value the risks and benefits highlighted in the consultation. As outlined in the consultation document, the government will publish an impact assessment prior to laying the order to bring about the policy change. This assessment will be based on input from the regulators and market participants, alongside responses to this consultation.”
The Treasury added it had conducted “extensive stakeholder engagement” during the FAMR which helped inform its work on the advice definition, but did not hold information on the number of meetings it had held with industry representatives specifically on this consultation.