LV’s managing director of life and pensions Richard Rowney, who was on the regulator’s Financial Advice Market Review expert panel, told FTAdviser to bring advice back to the mass market it is crucial that the government, regulator and industry work together.
LV has been one of the first in the UK to embrace so-called ‘robo’ automated advice options and Mr Rowney argued the FAMR’s work in this area is one way costs can be effectively brought down for the mass market.
The deadline for adviser comments on the FAMR is 22 December.
Yesterday (16 December) FTAdviser exclusively revealed three quarters of advisers have not yet responded to the Financial Advice Market Review, according to research by Zurich.
On his robo-advice plans, Mr Rowney said: “Our plan is to create an industry platform, sharing our technology so that IFAs can upgrade their websites and allow customers to engage with advice simply and easily.
“We’re also asking for some standardisation across the industry, which would help the government implement its ‘pension passport’ plans, thereby reducing the time advisers have to take with fact finds,” he continued, adding that providers should share data voluntarily, rather than being forced.
The Personal Finance Society’s chief executive Keith Richards agreed that such streamlined solutions compliment, rather than threaten regulated advice.
But he also added: “A word of caution though: even though they potentially increase public access to advice, you can’t automate critical systems without running the risk of creating another formulaic mis-selling scandal.
“They also provide a very attractive proposition for scammers too, which must be borne in mind,” he added.
Jamie Jenkins, head of pensions strategy at Standard Life, recently commented it seems likely that such ‘robo-advice’ models will actually prompt more frequent contact with real advisers.
“Interestingly, there is growing evidence in this area that customers engaging more with technology engage more overall, including a thirst to deal with people,” he stated, adding: “We’ve seen this link starting to form in the use of online retirement tools and subsequent phone contact.”
On his hopes for the FAMR, Mr Richards said: “The biggest single issue advisers want FAMR to address is what many view as unfair and unsustainable regulatory costs which distorts the overall cost of advice services and restricts access for consumers.
“Alternative funding solutions must be found - for the FSCS in particular - whether that be some form of product/investment levy, or a pooled-insurance system, to eliminate the seemingly never ending and sometimes crippling additional levies.”
He warned that the government and regulator’s aspirations to increase access to advice risk instead expanding industry funded ‘free guidance’ services for the mass market, thereby limiting the highest levels of consumer support and protection via regulated advice.
“Continuing to tax industry in this way is unsustainable and certainly not transparent to ‘advised consumers’, given that the cost has to be passed on to clients,” added Mr Richards.
Similar to Insurance Premium Tax, there is an increasing case for greater transparency and the introduction of a savings and investment premium tax, he stated, pointing out that education and debt counseling is equally crucial for and therefore becomes a government responsibility to provide the right level of support and funding.
“The consequences of previous government led ‘borrowing freedoms’ must unfortunately be borne by all, but should not be confused with the objectives of FAMR. I support, however the need for an appropriate financial education tax as we all have a social responsibility to help.”
peter.walker@ft.com
