Financial advice will keep people going

It is therefore critically important that the FCA takes every possible step to ensure that a strong and viable advice sector is ready, and able, to provide the advice which consumers will need.

The old saying: "When you are up to your knees in alligators, it is hard to remember that your objective was to drain the lake’"rings true for advisers and clients alike at the present time.

Coronavirus has been our ‘earthquake’ and the world will never be quite the same again

The reality is that nobody has any answers to the market’s gyrations, or what the economic impact of our, and other governments’ globally, actions will be.

Precisely because there are no answers at the moment, it is more important than ever for advisers to keep in close touch with clients.

Not to pretend that they know what will happen, but to reassure them that they are there and, most importantly, will also be there to help them when the crisis has passed.

It is then, whether it be three months, six months, or even longer, that the demand for financial advice will go through the roof.

Those who already work with an adviser will need their affairs and circumstances completely revisiting in the post-coronavirus world.

Equally, I predict that those consumers who have not previously sought financial advice, will seek it out in far greater numbers than ever before.

I welcome, and strongly support the steps already taken by the Government and the FCA to adopt a flexible, and I trust, pragmatic approach, to the Capital Adequacy requirements.

I also support the more recent announcements in respect of solvency requirements and other relaxations for all businesses, including financial advice firms.

Now is also the time for the FCA to address what is undoubtedly the greatest injustice in the whole of the financial services sector.

This is the unfair funding of the Financial Services Compensation Scheme.

I do not believe there is anyone in the financial sector that does not acknowledge the gross unfairness of the present burden, which falls predominantly on advice firms.

It is an unfairness of grotesque proportions, as IFA firms who have to pay this levy, have no chance whatsoever of stopping or influencing the actions of the minority of reckless and criminal firms that create the liabilities.

The solution is to charge a tiny levy on the trillions of funds under the management of our financial institutions.

This will still involve a small degree of unfairness; however, it is infinitesimal compared to the current system.

The FCA needs to start to address this injustice now, because it will take time to put the solution in place, and every month of delay will make it harder for the advice sector to rebuild its capital.

This creates the real possibility of significant consumer detriment through the inability of the sector to meet the huge demand for advice which will emerge post crisis.

Darwin, on his voyage in the Beagle, was caught in a South American earthquake, after which he wrote that he would never view the world in quite the same way again.

Coronavirus has been our ‘earthquake’ and the world, including that of financial planning, will never be quite the same again.

Consumers will have greater need for financial advice than ever before and the FCA must ensure that, after this emergency has passed, there is a vibrant and viable advice sector available to meet the inevitable demand.

Ken Davy is chairman of The SimplyBiz Group