Debates over how to provide a professional advice service to mainstream clients, which offers more than execution-only transactional systems but is commercially viable for advisory firms to offer remains an “unresolved” issue, John Griffith-Jones admitted last night.
Speaking at the Association of Professional Advisers annual gala dinner last night (18 November) in London, the Financial Conduct Authority chairman responded to challenges from the trade body that it had improved its accountability and “clarity”, but acknowledged ongoing questions around “commonly understood meanings” for advice.
Mr Griffith-Jones said that since taking over as FCA chairman he had sought to clarify some of these issues, but that it had not yet been able to answer queries relating to “guidance vs advice, and independent vs restricted advice”.
While one attendee at the event suggested the comments could be taken to suggest the regulator was “putting restricted advice back on the table” for clarification, Mr Griffiths-Jones seemed to focus more attention on perceptions of an ‘advice gap’ and on access to “properly qualified” advisers, especially in the wake of pension freedoms.
Arguing that it would be of benefit if more people were able to access full advice, he went on to emphasise the regulator’s focus on ‘project innovate’ and its attempts to inaugurate a system of simplified, online advice that would target mass market consumers.
Earlier in his own address, Apfa chairman Lord Deben had thrown down the gauntlet to the regulator in a series of four challenges, including the need to make advice accessible to the mainstream consumer, and to make its regulatory activities “transparent” and “accountable”.
Mr Griffith-Jones said that it had sought to achieve the latter through studies to examine the impact of regulation and whether it was applied retrospectively, adding that it was working on its ‘project innovate’ initiative to bring simplified advice models to market.
He stated that despite criticism from some quarters and demands from a number of bodies, not least the Treasury Select Committee, to delay RDR proposals to avoid harming the sector, the market had coped with the measures and was well prepared for the “opportunities” which lay ahead.
“18 months on I look around this room and you all look remarkably alive and well to me - I am glad we took the decision that we did [not to delay the reforms],” he said.
Mr Griffith-Jones added that the watchdog’s post-implementation review would cast on light on areas of the rules, such as advice definitions, which had not been successful and that the body would work to ensure “mark two is better than mark one”.
He also praised Apfa and the “constructive” work it had done to promote the sector, referring to comments from Lord Deben earlier in the evening that the trade body had refused to give in to those pressing for a tougher stance in favour of a more engaged dialogue with the regulator.
Some advisers at the event praised the FCA chairman for promoting the value of advice and for seeming to extol the virtues of professional support over the more generic ‘guidance guarantee’ solution which is to be offered via the Treasury.
Others were critical of what they saw as a condescending tone, picking on remarks which referred to “what we expect of you” as emphasising a lack of respect for the client relationships at the heart of the sector.
One adviser said simply: “Do you spell patronising with a capital ‘P’?”
Another attendee said one problem was “senior figures”making statements at events that sounded reasonable, but which were not borne out by other regulatory representatives “on the ground”, for example during reviews.
Lord Deben had earlier set a challenge for all members in the room to encourage two colleagues to become members for 2015, in order to ensure the organisation has broad support across the market and is able to speak for advisers more widely.
This follows criticism in the past that the trade body is mainly populated by members from the larger networks and national firms and therefore does not speak for smaller, directly-authorised advisers, which make up the bulk of the industry.
ashley.wassall@ft.com
