The FCA has been put on the back foot after an MP posed questions about the Heath Report and the regulator’s response to the numbers of people reportedly without access to financial advice.
During a Treasury select committee meeting, Martin Wheatley, chief executive of the FCA, and John Griffith-Jones, chairman of the regulator, were asked what the organisation was doing about the widening advice gap since RDR came in.
Quoting from the Heath Report, Steve Baker, Conservative MP for Wycombe, asked about the number of people left without advisers.
He said that, according to the Heath Report, there were up to 15m more people who no longer had access to professional financial advice.
Earlier this year, initial findings from industry veteran Garry Heath’s review of the industry, revealed that the number of IFAs who have left the market, and other entities unable to offer advice, has led to swathes of consumers left in advisory limbo.
Mr Wheatley said: “The market is dynamic and ever changing, and there are a number of smaller organisations looking to launch into the market.
“We are also seeing a wave of innovation, as well as financial technology and innovation, and we are trying to encourage this.”
Mr Wheatley said the FCA had also run workshops, where people talked about how to offer services. He added: “Engaging with the regulator is scary, so we have set up an innovation hub to help with this.”
Asked about the difference the regulator made between advice, information and guidance, Mr Wheatley said those dispensing each are different. He said: “It is an important distinction that holds the market together.”
Mr Wheatley was also questioned about the pension guidance guarantee and why the parties authorised to give the guidance were not subject to FCA authorisation.
He replied: “Our role is to set compliance but not authorise, and based on the fact that there will not be a conflict of interest.”
Adviser view
Garry Heath, founder of the former Association of IFAs and author of the Heath Report, said a huge portion of the previously advised population was no longer economically viable for most IFAs.
He said: “The regularly advised people in the UK either upgrade to the level of service of the seriously advised, which for them may be an overprovision, or face being dropped by their adviser.”
