FCA reveals five banks plan to offer advice

FCA reveals five banks plan to offer advice

Half of the companies working with the Financial Conduct Authority's advice unit are banks, according to the regulator's Project Innovate head.

Addressing a conference in London today (17 January), Bob Ferguson revealed there were five banks working with the advice unit and three IFA firms.

So far the FCA has not revealed which companies are taking part in the project and the only one to have come forward to confirm it is working with the regulator is True Potential.

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Mr Ferguson said the advice unit is also working with one asset manager and one unauthorised firm.

Last year FTAdviser revealed HSBC was testing standalone investment advice, where the bank would give advice on investments only without considering the customers’ wider financial situation.

Santander UK also restarted branch-based investment advice two years after it was hit with one of the biggest ever retail banking penalties for giving unsuitable advice to customers.

According to FTAdviser parent paper the Financial Times, the bank planned to have 225 advisers across the country by the end of March.

Santander announced the closure of its bancassurance division in February 2013 after the Financial Services Authority found serious failings in the way the bank assessed customers’ risk appetite.

Mr Ferguson also revealed that the FCA would be publishing "external guidance" on its experience of running the advice unit at some point this year.

The advice unit focuses on helping firms develop fully or partly automated online services and other models that use technology to deliver low cost advice.

Mr Ferguson also gave an update on the regulatory sandbox, which is a "safe space" for firms to test new ideas without incurring regulatory consequences and which is currently working with 24 firms.

He said: "We weren't expecting that many but we felt we had to be responsive to the level of demand. We ended up with quite a good spread across different sectors and different technologies.

"We are using temporary restricted authorisation, so effectively you get an authorisation for the purposes of the experiment and the fact that it is time-bound and scale-bound in that way enables us to take a proportionate approach."

Among the companies and organisations working with the FCA's regulatory sandbox is Citizens' Advice, which looking to develop a semi-automated advice tool which allows debt advisers and clients to compare the key features of available debt solutions.

David Penny, managing director of Somerset-based Invest Southwest, said he didn't feel threatened by banks planning to offer automated advice.

He said: "Robo-advice in general is coming, whether we like it or not and the advice community probably has to learn to embrace it.

"However robo-advice will always be a poor second best to a highly competent, qualified face-to-face adviser.

"The track record of the banks is consistently appalling in delivering financial advice and I have little doubt it will be another scandal waiting to happen."