Provider defence role must not stray into advice

Provider defence role must not stray into advice

Alastair Conway, chief executive of James Hay, said he was keen that the ‘second line of defence’ brought in by the FCA to protect against consumers draining their funds post-April must not cast providers in a role that goes beyond information and into advice.

Earlier today (27 January) the FCA confirmed rules for providers to issue personalised risk warnings to clients over pension access, which followed a ‘Dear CEO’ letter in January in response to concern across the industry.

It sets out expectations that firms should ask clients specific questions around their circumstances and give relevant risk warnings, even where the customer states they have taken advice or guidance.

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Speaking to FTAdviser’s Emma Ann Hughes before the rules were confirmed, Mr Conway said: “I get the regulator being concerned that when you open up a load of flexibility and options, as we have seen in the past, that can sometimes get abused.

“We think our role is very clear, which is to provide information and inform. The role of advice, guidance, etc, sits very squarely with advisers. The responsibility sits with the end investor to work their way through that with an adviser or directly, as they see fit.

“Our role is to inform. The difficult balance for someone in our position is not to drift into a world where we are providing a lot of information and people get confused about whether they are getting information or are they getting guidance or advice.

“We don’t want to slip over that line.”

The FCA’s rules state the wording of any rulings will not be prescribed and providers must devise the alerts for given circumstances independently.

Mr Conway said: “The challenge always is trying to find ways of giving information in ways that consumers engage with.

“I don’t think we are going to, overnight, solve that problem. All we can do is make sure it is clear, easy to understand, and easy to find.”