This year will be remembered as a year of unprecedented political and economic change, underlined by the UK’s decision to leave the EU and the rise of political populism in Europe, and of course the US.
It is against this backdrop of global uncertainty, that the UK’s financial advice sector has continued to evolve into a more professional, trusted and transparent marketplace for consumers seeking financial advice and long-term financial planning.
Throughout the year, the profession’s attention has been focused on the much-anticipated outcome of the Financial Advice Market Review (FAMR).
Since the final report’s release in March, an encouraging level of debate and discussion has taken place, with a range of views put forward on how best to deliver the report’s 28 recommendations.Being at the heart of consultation activities with the FCA and government, I have been heartened by their commitment to meaningful reform within our sector. We have already seen some major decisions made and I expect we will see some more early in the New Year.
Perhaps the most welcome revelation in 2016 was the government’s decision to scrap its plans for a secondary annuity market. The decision came just one week after we submitted our own input expressing serious concerns about the potential for poor consumer outcomes.
Another issue that continues to attract a wide range of views and opinion is the FCA’s review into FSCS funding. FSCS funding reform is acknowledged to be one of the most important issues to come out of FAMR, following concerns raised by the advice community and recognition that the current system acts as a deterrent for new entrants into regulated advice.
I am heartened by FCA chief Andrew Bailey’s recent commitment to broaden the regulator’s review of the FSCS by considering a product levy or even a combined professional indemnity insurance (PII)/FSCS solution to address the shortcomings of both.
A consultation paper is expected to be released imminently, and I expect ongoing discussion and consultation to take place throughout the first half of 2017.
The FCA and Treasury have also progressed several other consultations during the year, including a proposed change to the definition of regulated advice and suggested improvements to suitability reporting.
Brexit
As we work through each of FAMR’s 28 recommendations, many of us are still coming to terms with June’s referendum result, with plenty of questions about the impact of Brexit on financial services but very few answers. One thing is for sure – more consumers will need expert advice with such uncertainty ahead.
The future of the UK’s passporting rights has dominated debate in the financial services arena, and any loss of these rights will cause uncertainty for advisers who operate cross-border into Europe.
The economic and political headwinds will be compounded in 2017 by Donald Trump’s takeover of power in the US and general elections across Europe, including in France, the Netherlands and potentially Italy. This global uncertainty reinforces the value of professional advice and the importance of capitalising on the once-in-a-generation opportunity for reform that FAMR has provided us with.
In what has been an eventful year, we were left with a fairly uneventful Autumn Statement. For our sector, it was pleasing to hear the government would open consultation on a proposed ban on pension cold calling, two months after PFS member Darren Cooke launched a parliamentary petition on the matter.
The Personal Finance Society signed the petition and has also launched a national anti-scamming campaign in collaboration with the FCA’s ScamSmart initiative, calling on the advice community to join the fight against scammers and fraudsters who continue to prey on the vulnerable in our community.
By adopting more innovative and sophisticated methods, these unscrupulous operators are posing a greater threat than ever. As we look ahead to 2017, we should all consider what we can do in the coming year to protect the vulnerable from these financial predators.
Keith Richards is chief executive of the Personal Finance Society
