The Financial Advice Market Review (FAMR) has come under more pressure as new data suggests adviser profits are continuing to fall more than four years after introduction of the RDR.
At the Marketforce Future of Life and Pensions conference in London on 13 June, chief executives Andy Briggs from Aviva and Hargreaves Lansdown’s Christopher Hill both criticised the effectiveness of FAMR.
According to Mr Hill, the review has failed to meet its objective of encouraging more people to take advice to such an extent that the process should be “reset’”. Mr Briggs described the review as ‘not good enough’ and suggested the need for advice has been amplified since the introduction of pension freedoms.
Chris Hannant, strategic adviser to the Personal Investment Management & Financial Advice Association (Pimfa), shared similar concerns. Mr Hannant said: “FAMR didn’t tackle the big issues. In focusing on revising advice and guidance of various sorts, it won’t alter the fundamental framework and so will result in little real change. Proof of that, one way of other, will be in the review in 2019, but we suspect the challenges around access to financial advice will remain.”
Claire Trott, head of pensions strategy at Technical Connection, said a range of guidance and advice options was key to helping consumers and called for more action from the regulator.
The Financial Advice Market Review was launched by the Treasury in August 2015 in a bid to address the issue of consumers being priced out of the advice market since introduction of the Retail Distribution Review.
The final report was issued in March 2016. The FCA and Treasury issued an update on progress over the past year in March.
But recent data suggests that advisers also need some help from the regulator. A report issued in May by the Association of Professional Financial Advisers – prior to its merger with the Wealth Management Association to become Pimfa – showed a sharp decline in advice firm profits over the past two years.
Additionally, profits as a percentage of revenue stood at 25.4 per cent in 2013, but this has slumped to 17.1 per cent as of 2016.
Mr Hannant said that liability and regulatory costs must be addressed if industry confidence is to be restored. He said: “Individually tailored advice costs time and money to put together. A mass-market solution would have to allow for a simpler offering with consumers taking more responsibility for choices. It’s all or nothing at present, with nothing in between.”