Simplification tops my Christmas list

The responses to the FAMR Consultation Paper have to be in by 22 December, which is just in time for you to bring your good cheer to all your helpers beavering away at the FCA, the Treasury and the FSCS.

We know they have had an incredibly busy year, what with all the uncertainty before the General Election, and then the changes as the government turned as blue as a naked gnome in the snow. Nonetheless, it is amazing to think that in 2015, the FCA alone has managed to bring out 42 consultation papers, 28 policy statements, seven discussion papers, seven guidance consultations, six occasional papers, five finalised guidances and four quarterly updates; and not a partridge in a pear tree in sight.

If I did not know better, I might think it was a deliberate attempt to make the advice gap even worse by giving advisers all this information to keep up with. The sad reality of course is that advisers are far too busy trying to look after their clients to read these papers.

The sad reality is that advisers are far too busy trying to look after their clients to read these papers

The fact is that everyone knows there is an advice gap and, since the RDR, it has got worse. Many millions of hard-working people who do not have the benefit of inflation-proofed final salary pensions or fat salaries would still benefit from good-quality financial advice, if only they could readily access it.

So, Santa, my fellow advisers have asked me to see if you can work your magic on the FAMR and deliver some solutions during 2016 which will help them all serve their clients, and consumers in general, more effectively.

First and foremost, if the government is serious about solving the advice gap for the less well-off, we must have greater simplicity in both regulation and products. This simplification must also extend to transparency of product costs, by using the total expense ratio so that consumers can make straightforward comparisons between products. Advisers also need to be confident that if clients have been given the appropriate advice in writing, they cannot pretend to Fos years later that they did not know what they had bought.§ Clients must take some responsibility for their actions.

Secondly, along with the cost savings and greater availability of advice which simplification will provide, we need action on the direct costs of regulation. The best present would be a fundamental recasting of how the FSCS is financed.

Lastly, Santa, your robo-advice toys and sandpits all sound lovely in theory, but as the old song says: “People need people”. If your friends at the Treasury really want to make a difference to the advice gap, the outcome of the FAMR must ensure that more consumers are able to build long-term relationships with more advisers.

Ken Davy is chairman of SimplyBiz