The Financial Advice Market Review must once-and-for-all clear up the semantic mess around the definition of advice, according to Nutmeg’s founder.
Speaking at this morning’s Financial Conduct Authority ‘robo-advice’ forum, Nick Hungerford expressed a worry that nothing good will actually come from the government and regulator’s review into the causes and solutions to the advice gap.
“I’m glad that there have been no collective intakes of breath when anyone has used the word advice, as has been the case at other conferences.
“FAMR needs to clean up this ‘advice’ and ‘guidance’ question, as there’s essentially three types: people who just need a bit of help, those who want to do it themselves and people who want things done for them.”
He continued by stating that the industry will not gain consumer trust until it stops using acronyms. “We’re not entitled to customers and we must update our vocabulary to fit with the real world.”
During the first day of the conference, the economic secretary to the Treasury Harriet Baldwin promised that both the government and regulator were developing a ‘sandbox’ or ‘safe harbour’ for firms to innovate and experiment with new ideas in this space, with both consumer and regulatory consent.
Mr Hungerford commented that such safe harbours, or pre-approved templates, could increase consumer engagement to “previously unimaginable levels”, although he noted that providers would have to agree on a framework of fee caps, simple products, liquidity levels and degrees of transparency.
Ed Smith, the FCA’s head of banking, lending and distribution - and one of those leading the FAMR - told delegates that the regulator was certainly open to considering such suggestions as part of the review.
“It’s all about getting the balance right, the devil is in the detail of such templates, but we definitely want to explore ways of making things quicker and easier,” he added.
Also speaking in the same session was Faith Reynolds, a member of the Financial Services Consumer Panel, who complained that despite recent advances, it is still quite complex to access advice.
“Tpas and Mas were created as a service, to access a service, to access a product,” she opined, adding that “consumers find making financial decisions to be anxiety inducing” and the industry needs to understand this.
peter.walker@ft.com
