The Financial Conduct Authority (FCA) is revisiting the financial advice sector with a review of the consumer investment market.
The regulator has issued a ‘call for input’ which aims partly to tackle the level of returns from investments, and the suitability of products.
“Too often consumers receive lower returns than they should because of unsuitable products with high fees,” the regulator said and added that “reducing harm” in the consumer investments market is a priority in the FCA’s 2020/21 Business Plan.
Key questions posed in the call for input include: What more can be done to help the market offer a range of products that meet straightforward investment needs? And what can be done to ensure people able to take higher risks can do so in a way that ensures they understand the risk they are taking?
Financial promotions, scams and compensation are also areas of focus.
FCA interim CEO Christopher Woolard, said the consumer investment market “is not working as well as it should”.
As well as scams and scandals, he said that too often consumers are offered unsuitable products or advice, meaning many consumers lack confidence in the investment market.
“This call for input is aiming to help shape the future of consumer investments, including regulation, to ensure consumers can have faith in the market.
‘We’ll be considering all contributions carefully as we open this debate on the future of the consumer investment market.”
However, Woolard does acknowledge that “much of the consumer investment market meets the goals of retail investors”. For example, he says, there has been growth in retail investors’ use of mass-market investments through stocks and shares ISAs that have 3.2 million investors and have £314 billion in assets under management.
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