The Financial Conduct Authority (FCA) has published its finalised guidance on streamlined advice and the fact find process. The guidance is a response to a period of consultation and, ultimately, the findings of the Financial Advice Markets Review (FAMR), which published a series of recommendations in its final report in March 2016.
The guidance includes the FCA's response to two of FAMR's recommendations. This article focuses on FCA's views on the portability of fact finds. But to understand the concerns and recommendations, it is important to understand also the background the FAMR and the FAMR recommendations that the guidance addresses.
The guidance includes the FCA’s response to two of FAMR’s recommendations.
One such recommendation was the portability of fact finds. But to understand the concerns and recommend-ations, it is important to also understand the background to the FAMR recommendations that the guidance addresses.
FAMR was an initiative developed and co-published by FCA and HM Treasury that focused on the advice gap: the barriers to consumers accessing financial advice and guidance at an affordable price. FAMR’s recommendations were aimed at giving consumers access to appropriate and affordable financial advice.
It sought to simplify the scope of regulated advice and clarify the distinction between offering regulated advice on investments and the provision of financial guidance. It concluded that regulated advice (“investment advice” under the Regulated Activities Order (RAO)), needed to be redefined in line with the Markets in Financial Instruments Directive (Mifid) definition. In order for advice to be regulated advice, it had to be based on a personal recommendation. So advice that fell short of being based on a personal recommendation need not be subject to the same, onerous, regulatory requirements as regulated advice. The government decided to address this by amending Article 53(1) RAO.
HM Treasury needed to tread a fine line. On the one hand it wanted to make it less onerous for firms to provide high level guidance on investments. On the other hand, it did not want the changes to lead to unauthorised firms providing advice outside the regulated environment.
Key points
• FAMR guidance recommendation 10 focused on the portability of a fact find from one adviser to another.
• The ideal is for firms to be able to use pre-existing information to facilitate a fact find.
• Mifid also requires firms to take reasonable steps to ensure information received is reliable.
