Financial Conduct Authority  

FCA warns of 'significant' advice price clustering

The regulator's review of the advice market has faced a number of delays in the last 18 months, some of which were as a result of the coronavirus pandemic this year. 

The most recent paper on the impact of the RDR and FAMR was published in May last year, when the FCA acknowledged some of its rules might be having a "negative impact" on the market.

At the time the City watchdog asked advisers if its rules were driving too many people to seek advice and if any barriers existed in the market hampering effective competition between firms offering advice and guidance.  

The FCA said today: "Our ambition is to facilitate a market that is more innovative and serves a greater number of consumers who will benefit from support at different stages in their lives, and will be empowered to make their own decisions and choices.

"In practice, this is likely to mean a market that provides a wider range of services, including one-off advice models that are available and easily accessible, and where firms compete on the value of the services they offer." 

A two-step plan 

The FCA advised the market would benefit from a greater focus on two key support services: simpler forms of streamlined advice, and more personalised guidance services. 

The regulator acknowledged these already existed but found they had failed to grow in the market on a significant scale. 

It said: "Guidance that is more personalised to the specific needs of a customer but which does not amount to regulated financial advice.

"While at present firms provide generic information covering most aspects of financial planning, it is often the case that customers must find the information for themselves and consider how to apply it to their own circumstances.

"For consumers who want an advised service, streamlined advice services provide straightforward, one-off advice to customers with less complex needs.

"Unlike holistic advice services, streamlined advice provides a personal recommendation limited to one or more of a customer’s needs -as this is a simpler service, charges for customers should be lower, making it more affordable."

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