Today (12 October) the Financial Conduct Authority and HM Treasury launched an input paper giving advisers until 22 December to explain what puts them off offering advice.
Tobin Ashby, legal director in the insurance team at Pinsent Masons, said what was exciting about the review was the involvement of both the regulator and HM Treasury, opening the door to potential change in the UK legislation that appeared to hamper other reviews.
He said the FAMR represented an opportunity to refine some of the rules and guidance on financial advice to cope with the new kind of services made possible by technological advances.
Mr Ashby said: “The regulator and the industry as a whole have moved on in an environment that is more focused on principles-based regulation and Treating Customers Fairly and the consultation is careful to focus on consumer needs before asking questions on the economics of providing advice.
“The long list of questions (contained in the input paper) supports HMT’s initial proposal of a ‘broad scope’ exercise to gather evidence and it will be some time before the full results of this review become clear.
“With the political will that is driving this consultation, advice firms and product providers will not have a better chance to put forward their views on how to change the advice framework to serve a wider range of customers - and perhaps plug the infamous advice gap.”
Dr Sandy Scott, chief executive of the Chartered Insurance Institute (CII), said the current alphabet soup of non-advised models that exist is bewildering to those working in the sector, never mind consumers trying to get their heads around complex financial issues for the first time.
He said any efforts to streamline this from a consumer perspective must be consistent with building greater public trust and confidence.
But Dr Scott said if access to professional financial ‘advice’, as the public perceive it, is to be brought into the hands of the many, it must be with a guarantee of quality and protection.
He said: “Just because a service is not advice in the regulatory sense, it does not mean that mass market consumers cannot be given the services and standards they deserve.”
For Kate Smith, regulatory strategy manager at Aegon, the Financial Advice Market Review’s proposed focus on long-term savings and taking income in retirement is welcome.
She said: “People don’t always recognise when they need guidance or when they would benefit from advice tailored to their own unique circumstances and the review will need to consider the role of financial education in helping people to distinguish the two.
“There are a number of ingrained challenges that the review will have to address. Our own research supports the view that while the majority of people are comfortable making decisions regarding simple financial products like savings accounts, few feel able to act when it comes to pensions and investments.