The Financial Conduct Authority has launched a consultation on proposals designed to make individual financial advice more accessible to consumers facing important money decisions.
The regulator said it wants to make it easier for firms to offer simplified forms of personalised advice for customers with more straightforward needs, without requiring a full assessment of every aspect of their financial circumstances.
The FCA believes that could help broaden access to advice by lowering the cost and complexity of support, while preserving consumer protections.
CONSULTATION ON ADVICE RULES
Under the proposals, the watchdog would simplify and consolidate the suitability framework into a single set of common rules and expectations. It also wants to clarify existing flexibilities in the rules, with an expectation that advisers gather “sufficient” information when assessing suitability.
The regulator is also proposing changes to suitability communications, with the aim of making them more concise, proportionate and focused on the consumer.
In addition, firms could be given greater freedom over how they structure ongoing advice services. That would include moving away from a fixed annual suitability review towards periodic reviews based on a client’s needs.
The FCA is also opening a discussion on the future of trail commission, saying it wants to modernise the rules and reduce the risk of consumer harm.
NO CHANGE TO QUALIFICATIONS OR CHARGING
The regulator said qualification standards for advisers would remain unchanged. It is also not proposing changes to adviser charging rules, meaning advice would still need to be paid for through agreed adviser charges rather than provider-paid commission or cross-subsidisation.
Sarah Pritchard, deputy chief executive of the FCA, said: “For too long the support people need to make important financial decisions has been out of reach for many.
“A market that provides good quality, lower cost simplified advice alongside comprehensive financial advice and targeted support will better support people making decisions about their financial lives.
“We want to see more people getting supported, who aren’t currently, and a market that innovates and offers tailored services to meet differing consumer needs.
“We welcome everyone’s views on whether our proposals will achieve our aim of building firms’ confidence to offer a wider range of advice and ultimately to help consumers navigate their financial lives.”
The FCA said firms can already provide simplified forms of advice, but take-up across the market has been limited.
The consultation follows earlier action by the regulator to expand the range of support available to consumers. From April, some financial firms will be allowed to offer targeted support and suggest products to customers based on what would be recommended to people in similar circumstances.
While targeted support is intended to help groups of consumers, the FCA said many people would still need, or prefer, advice tailored to their individual situation.
WELCOME STEP
James Heal, director of public policy at St. James’s Place, said: “The FCA’s consultation is a welcome step in clarifying the requirements around ongoing advice services, especially the recognition that consumers need different things from ongoing advice enabling some flexibility in offering.
“We are also pleased that the FCA recognises the need for firms to be able to design commercially viable simplified advice. On this latter point, we believe a lot of work will be needed if the objective is to genuinely widen access to advice, close the advice gap, and encourage more people to invest for the long term.
“We will now work with the FCA and wider industry to try to achieve this, whilst also protecting the quality of holistic advice for those who receive it.”
The watchdog described the consultation, alongside updates to perimeter guidance, as the final stage of its wider policy work on ensuring the advice market serves the millions of people who rely on it for their financial futures.
