In Focus: Modern financial planner  

Pimfa: Why simplified advice needs to feature in FCA handbook

Pimfa: Why simplified advice needs to feature in FCA handbook

There is no scope to water down advice, but if the industry wants to be able to serve the 15mn people who need advice but do not get it, change is needed, says Simon Harrington.

The head of public affairs at the adviser trade body says the FCA wants advisers to do more, but what is currently possible is rooted in 'handbook guidance', rather than the handbook itself, which makes it risky for advisers to experiment with simpler models.

"What we want is to look at the idea of what a personal recommendation is and find a process that sits between the 'full fat' personal recommendation of holistic advice and doing nothing at all," he says.

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"Ultimately it's unlikely, we think, with the way in which the handbook is currently sort of constructed that the vast majority of the industry will follow in that path because ultimately the risk to them and the risk to their established books is far too high."

He says the 15.6mn people with simpler investment needs, as identified by the FCA, would benefit from professional support but not necessarily from full advice.

These are adults with investible assets of £10,000 or more, of who 37 per cent hold their assets entirely in cash, and a further 18 per cent hold more than three quarters in cash.

"Current suitability requirements are right," says Harrington, "we do not think that there is scope to water down what is currently 'full fat' advice because ultimately holistic advice is geared towards the individual receiving the best possible outcome and taking full account of the suitability [and] their needs and finding products that sort of match them.

"The issue that we have is that that is expensive."

To find out how exactly Pimfa's simplified advice would work, and what are the chances of pushing it through the legislative and regulatory bodies, click on the link above.