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FCA says banks won't fill advice gap

FCA says banks won't fill advice gap

Banks are not a panacea to the problems facing the financial advice market, David Geale has said.

The Financial Conduct Authority's director of policy said it was difficult to predict whether the Financial Advice Market Review would lead to more banks returning to the sector.

Back in March 2016, the final report of the Financial Advice Market Review - which was tasked with tackling the advice gap - called for HM Treasury to consult on changes to legislation to narrow the definition of regulated advice so that it is based on a personal recommendation.

This would create a single definition for regulated financial advice and remove some of the barriers that exist for firms wishing to offer guidance services.

The report also recommended a number of measures for the Financial Conduct Authority to take forward, aimed at giving firms the confidence to deliver streamlined advisory services focusing on specific consumer needs.

It stated the regulator should also consult on measures to support firms developing guidance services that help consumers make their own investment decisions.

The review also highlighted the increasing role that technology can play in creating a more engaging, cost-effective advice market.

Speaking at the Marketforce Future of Life and Pensions conference today (14 June) he said: "The purpose of this (the Financial Advice Market Review) was to enable more firms or to help more firms to have the confidence to launch low cost propositions people can engage with.

"That is about a range of services. I don't think the banks are a panacea but they have a large number of customers and maybe this is a space where they can do some good."

He pointed out that with auto-enrolment there would be many more people with sizeable pension savings who would need advice.

Mr Geale said: "My hope is that what we have done will give people the confidence to say 'this is the help our customers need, now we understand how we can give that and what comes with that and now we can take forward a proposition'.

"Some of the smaller independent financial advisers also want to serve customers which it might be uneconomical to serve now."

Mr Geale added that later this month the FCA would be publishing it's baseline measures for judging whether the Financial Advice Market Review process had been a success over the next few years.

He said this was based on research with 10,000 consumers.