FCA reveals plans to make financial advice more accessible

Dec 14, 2022 1:20:41 PM

What has happened?

In November 2022, the FCA, as part of its consumer investment strategy, set out in its Consultation Paper 22/4 to broaden access to financial advice for mainstream investments and new proposals to improve access to FCA financial advisers.

What are the key points??

The proposals would create a separate and simplified core financial advice regime, making it cheaper and easier for firms that hold the necessary permission, and their appointed representatives, to advise consumers about certain mainstream investments held within stocks and shares ISAs.

The FCA’s proposed changes aim to prevent in-person financial advice from being too costly for many potential investors, as this can stop them from investing instead of holding excess cash when it may be in their interest to invest. It wants the regime to be straightforward and affordable for mass market consumers with at least £10,000 in cash savings.

The FCA is consulting on:

• Proportionately reducing the existing qualification requirements to reflect the lower risk of this narrow scope core advice, focused on only the necessary technical and regulatory understanding to advise on mainstream investments,
• Streamlining the existing COBS 9A suitability requirements to reflect the narrower scope and complexity of this advice relevant to the decision that consumers will be making (although suitability reports will still be required),
• Limiting the possible investments advisers can recommend under the new regime to a set of mainstream investments, by excluding any recommendations to invest in high‑risk investments, and
• Applying the adviser charging regime while allowing greater flexibility in charging structures to allow consumers to pay for transactional advice in instalments without bringing firms into the scope of consumer credit legislation.

The FCA expects these changes, along with the Product Governance requirements and the Consumer Duty, should mean that core investment advice can be offered to consumers at a lower price point than holistic (i.e. mainstream) financial advice.

The FCA will seek to publish a final policy statement and to finalise rules and guidance in spring 2023, targeting implementation of the regime before the end of the 2023/24 financial year (end March 2024) so firms would be able to start offering core investment advice from the beginning of April 2024.

How can we help you?

If you’d like to know more about how we can help you with your pension transfer advice or DB pension review arrangements, or any other regulatory compliance issues, our specialist team FCA financial advisers are here to help. We can conduct pension transfer back book reviews, including reviews of BSPS advice.

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