Success of FCA's robo-advice unit revealed

Success of FCA's robo-advice unit revealed

Half of the companies in the first wave of the Financial Conduct Authority's advice unit have either launched a low-cost advice service or will be doing so imminently.

The first cohort of the advice unit started in 2016 and included 10 firms - of which five were banks - and only one of those have confirmed to FTAdviser they will not be launching anything as a result of their interactions with the FCA.

The creation of the advice unit as an offshoot of the FCA's Project Innovate to help firms develop automated advice models was a recommendation of the Financial Advice Market Review, which was published in March 2016.

HSBC has confirmed they will be launching an online investment advice service in the first half of 2018 while True Potential also said it will launch its service this year.

Meanwhile fintech firm Mortimer Mackenzie has been testing a service called Marble to provide personal financial plans and soft-launched this last week.

Fiona Mackenzie, the founder of Mortimer Mackenzie, said: "We started the company with an aim to develop a full financial planning and advice service - particularly targeted at UK consumers who fall into the affordable advice gap, who are comfortable with tech but would like some help to save for a deposit or to see how best to save in a pension.

"We plan to layer on personal financial advice as one of the later updates to Marble."

NatWest launched its robo-advice service in November, charging just £10 if the customer decides to invest, and has confirmed this was tested in the FCA's advice unit.

Meanwhile Evestor launched its regulated financial advice service in April 2017 and said it had been "well-received" so far.

The only firm which has said it would not be launched anything as a result of its work with the advice unit was Money Guidance, a community interest company which provides tools to help people make financial decisions.

Philip Dodd, managing director of Money Guidance, said: "Our experience of the FCA's advice unit was very positive.

"In terms of 'trialling' within the unit, this was not as relevant to our initiative as to other participants who were looking to implement a comprehensive robo-advice approach - as distinct from our own, which was a hybrid solution that used automation as complementary to the delivery of regulated consumer advice.

"The service has not been launched. The main reason was that the cost of client acquisition and the establishment of regional hubs outweighed our projected income calculations from a lower cost 'dip-in/dip-out' fee for regulated advice solutions."

He added that the company "could not be satisfied" that a market existed for the service it was trialling.

Santander did not respond to the questions FTAdviser asked about what services the bank was trialling with the FCA and when they would be launched.

Instead, a spokesman said: "Santander has participated in the FCA’s advice unit and were also active participants in the FAMR round table sessions with the FCA and HM Treasury.