Reaction to the Financial Advice Market Review (FAMR) has fallen into three broad camps.
1. Those welcoming it as an important step in the right direction
2. Those slamming it for not actually delivering anything of much substance and calling for further consultations
3. Those (within the advice community) raging against the fact that it does little to help the financial advice community.
At Iress, we fall into the first category of firms welcoming FAMR as an important step. And here’s why.
The main value of FAMR is in the positive signals it has already sent to the industry in terms of addressing financial support services and access the mass-market is currently missing.
Rather than setting a negative tone FAMR seems to want to help all players in the market understand what they can do and actively encourage the industry to develop new and better ways of working - to the ultimate benefit of consumers.
The RDR turned into a bit of a restrictive rules based “red light” whereas the FAMR seems more of a “green light” in encouraging innovation.
While FAMR might be a bit short on substance at the moment, I think we’re already beginning to see the “green light” effect with many big players planning to re-enter the market with new and different offerings.
What is also encouraging, is this won’t be to the detriment of current market players but will mean opening up sectors of the market that RDR effectively closed.
Additionally, the jeopardy is just too high to rush into any firm decisions without properly engaging with all interested parties first and weighing up the pros and cons of a range of approaches. That’s going to take some time and it needs to.
The mass market audience that FAMR is attempting to find solutions for has very different needs. They are old and young, rich and poor, digitally savvy and technophobic. They are financially literate and completely disinterested in money matters.
Some would engage with ‘advice’ if only they could afford it and some would never go near a financial adviser. In short - there is no one-size-fits-all solution that would work to address such a disparate audience.
What we’re talking about here is the foundation for mass-market financial solutions that will have an impact for generations to come. A quick solution is not what’s required here. We need a good solution - or as we will probably come to discover - a range of good solutions.
So we welcome the various recommendations to consult further, in a way that will engage key parts of the industry, from the regulator, existing providers, banks and advisers to consumer bodies and start-up fintech businesses.
As a leading global technology company servicing the financial industry, Iress is acutely aware of the benefits innovative technology can deliver to better engage people in managing their money. It’s really encouraging the FCA is focussing on technology as a key engagement method.