FAMR is not a horror story

With the exception of a few voices, many pundits and commentators have characterised the review as at best a missed opportunity, and at worst a huge boost for the banks.

My view is that it is nothing of the sort.

I wrote about the FAMR only a few weeks ago, suggesting that it was better than that. On reflection, it is significantly better.

Of course, a lot of work remains to be done, with huge amounts of additional research passed to working parties, internal advice units and more.

To take just one recommendation, the pensions dashboard – where savers can view all their pensions in one place – will take a huge amount of grunt work, co-ordination and co-operation from sections of the industry famous for shoestring administration.

And that is before we get to government data on state pension entitlement.

Yet the dashboard, no matter how useful it could prove, is not the main event for advisers.

I would also suggest investment advisers need to reflect again, before the debate gets away from them, on exactly what the FAMR was designed to resolve. It was not, for example, meant to reverse the Retail Distribution Review. It was not primarily about improving conditions for advisers, except in terms of helping them advise more effectively or helping them or others reach more consumers.

Some of FAMR’s outcomes are far from small beer

Advisers may well be frustrated that the guidance-and-advice debate, which many feel is as useful as pondering how many angels can dance on the head of a pin, has been reopened. By contrast, a regulatory debate over the long stop has again failed to emerge.

But I suggest advisers look once more at some of the review’s suggestions. The following is not small beer.

FAMR recommends that the regulator’s review of how the Financial Services Compensation Scheme is funded should explore risk-based levies, and reforming the funding classes.

Does this mean that advisers not involved in the Wild West of unregulated products could see a drop in fees? In future, might they avoid helping to bail out US-based spread-betting firms with UK stockbroking subsidiaries? The answer has to be, at worst, ‘perhaps’ – if advisers can keep the pressure up.

In terms of the Financial Ombudsman Service, there are four extra requirements, all small in themselves, to be more transparent and more communicative. It’s not a long stop, but it is much better than the brick wall against which many advisers believe they have been banging their heads.

I have noted in a previous column that the FCA and the Treasury will look to publish baseline indicators, updated annually, to monitor the development of the advice market. My view is this means a much lower likelihood of future reforms that significantly damage the sector.

If you combine all this with a gradualist approach on automated and streamlined advice, which allows for considered adoption but does not, in my view, provide some kind of easy pass for banks, then I suggest FAMR is well worth a second look.

There’s no reason for a street party. Yet adviser reaction is in danger of snatching defeat from the jaws of what could eventually be a significant victory.

John Lappin writes on industry issues