The Financial Advice Market Review has been published, laying out several recommendations set to change the industry for years to come.
The final report has called for HM Treasury to consult on changes to legislation to narrow the definition of regulated advice so that it is based on a personal recommendation.
This would create a single definition for regulated financial advice and remove some of the barriers that exist for firms wishing to offer guidance services.
The report also recommended a number of measures for the Financial Conduct Authority to take forward, aimed at giving firms the confidence to deliver streamlined advisory services focusing on specific consumer needs.
It stated the regulator should also consult on measures to support firms developing guidance services that help consumers make their own investment decisions.
The review also highlighted the increasing role that technology can play in creating a more engaging, cost-effective advice market.
It recommended that the FCA extend the work of Project Innovate and establish a unit to help firms develop their automated advice models.
To make advice more accessible, the FAMR report called on the government to allow consumers to access a small part of their pension pot to redeem against the cost of pre-retirement advice.
This will ensure that consumers can access financial advice at a ‘key milestone’ in their lives and feel confident in making financial decisions as they approach retirement.
The report also urged the government to explore ways to improve the existing income tax and National Insurance exemption for employer-arranged pension advice.
To provide greater certainty for advisers regarding their future liability while maintaining robust consumer protections, the FAMR made various recommendations for the FCA to consider in its review of how the Financial Service Compensation Scheme is funded, which will begin in April.
It also proposed a series of measures to improve the transparency of the processes and decisions of the Financial Ombudsman Service.
However, after consideration of the evidence, the FAMR has concluded that relatively few complaints relate to advice given by independent financial advisers 15 years ago or more.
As a result the FAMR has ruled out recommending a 15-year long-stop, as this would “inappropriately limit” protection for consumers on long-term products.
The report’s co-chair and director general for financial services at HM Treasury, Charles Roxburgh, stated the recommendations will increase the amount of affordable, high quality financial advice that is widely available “so it’s easier for people to access it at every stage of their lives”.
The FCA’s acting chief executive Tracey McDermott added: “The package of reforms we have laid out today (14 March) will help increase both the accessibility and affordability of the advice and guidance to ensure that consumers get the help they really need when they really need it.”
peter.walker@ft.com
