The trade association for the UK’s wealth management market, PIMFA, has called on the Financial Conduct Authority (FCA) to provide more clarity to financial advisors ahead of upcoming reforms.
The call from PIMFA comes in response to the FCA’s recently published Advice Guidance Boundary Review which has called on the industry close the advice gap, whereby too many consumers consider the use of a financial advisor too complex to pursue.
The FCA has proposed the concept of a ‘simplified advice’ model which could appeal to a wider range of consumers.
FCA proposals pose material threat
However, according to PIMFA, there needs to a streamlining of the questionnaire process between advisers and clients and a lifting of the monetary cap on simplified advice.
“For simplified advice to work it needs to provide regulatory clarity for firms and has to be commercially viable,” said Simon Harrington, head of public affairs at PIMFA.
Harrington called for more guidance from the FCA on what questions should and should not ask of clients to meet their specific needs. “Firms should then have the flexibility to design processes around this which meet the regulator’s expectations,” said Harrington.
UK consumers “regret” not taking financial advice in the last five years
“This will reduce their potential liability in the event of future complaints and make them certain that the service they are delivering differentiates sufficiently from holistic advice.”
Harrington also called for the scope of simplified advice to be broadened. “There is very real value in allowing the sale of decumulation products to be included within simplified advice, provided that focus is on what the client decumulates with, rather than gaining an understanding of how they should decumulate.
“More broadly, we would urge the FCA to reconsider the £85,000 cap which we believe serves little, if any purpose,” added Harrington.
