The advice process would also follow a good practice guide that could be provided by the Personal Finance Society, which already issues some excellent guides in other areas. Note that it is good practice, not best practice, as it is almost impossible to get agreement on what is best practice.
The advisers would still have to satisfy a qualification requirement and have a statement of professional standing. As they would be following a set process, there would be very little risk of giving bad advice. From the consumer’s viewpoint they would know that they were getting straightforward, low-cost products that would meet their needs. They would have to accept that it might not necessarily be the perfect solution, but this could be provided if they saw a financial planner who could give them a more bespoke service and use a wider range of products to meet their needs. This, of course, would come at a greater cost.
Most importantly, Fos would also have to recognise that claims could not arise provided the adviser had followed the good practice standard, only using the specified marked products and that they were clear and honest in their dealings.
By following the above, the adviser, advisory firm and their professional indemnity insurer would know that they operated in a safe harbour whereby they would be able to demonstrate that they had given the consumer what they promised and they would not be liable for claims related to suitability.
Dr Peter Williams is an independent business consultant and chartered financial planner