- Plans to create a new ‘core advice’ regime have been paused and rolled into a wider review of the boundary between advice and guidance, the FCA has confirmed (Advice Guidance Boundary Review | FCA)
- AJ Bell research previously revealed limited support for the plans among advisers, with just 7% planning to offer a ‘core advice’ service (New research reveals just 7% of advisers plan to offer simplified ‘core advice’ | AJ Bell)
- The FCA says the Advice Guidance Boundary Review aims “to ensure that consumers get the help they need, at the time they need it, and which is affordable to them”
- The regulator has also published clarification on how the boundary operates today in an attempt to boost the support available to customers (Helping firms provide more support to customers making investment decisions | FCA)
- However, more radical reforms will likely be needed to ensure more customers are given useful support when making financial decisions
Tom Selby, head of retirement policy at AJ Bell, sits on an industry working group advising the FCA and the Treasury as part of the Advice Guidance Boundary Review.
Selby comments: “The FCA and the Treasury deserve credit for recognising that pushing ahead with ‘core advice’ plans that very few in the industry supported was a dead end. If government, the regulator and the wider industry are to provide more useful guidance and advice to the millions of people who desperately need it, ensuring broad support for any solution is essential.
“Ultimately, the success of the Advice Guidance Boundary Review will be judged on the outcomes consumers experience and the quality of help they receive under any reformed regime.
“If a solution is proposed but nobody is willing to offer it, then clearly there will be no consumer benefit – and the fact only 7% of advisers were interested in the proposed ‘core advice’ regime spoke volumes. That the FCA and government have established working groups representing both the industry and consumers as part of the Review should ensure any proposed solutions are both practical to implement and in consumers’ interests.”
Potential to improve outcomes for millions of savers
“The Advice Guidance Boundary Review has the potential to radically improve the support savers and investors in the UK receive. As things stand, lack of clarity over that boundary, combined with strict rules which prevent personalisation of communications, mean millions of people are receiving only very generic help from firms when making often complex financial decisions.
“The clarification on the advice guidance boundary provided by the FCA today may prove useful, although it is likely more radical reform will be needed further down the line if we are to make a meaningful dent in the ‘help gap’.
“Consumer Duty and its focus on good consumer outcomes provides a unique opportunity to rethink the way financial guidance is delivered to people. The aim here has to be to maximise the support available to consumers of all means, with a recognition that most will be either unwilling or unable to pay a fee.
“It is crucial any solution brought forward can be implemented simply across a firm’s entire customer base, is not overly burdensome and offers the necessary flexibility to allow businesses to devise guidance solutions that suit their customers’ needs, in line with the key principles and requirements of Consumer Duty.”
