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FAMR failing to close ‘advice gap’

22 April 2018

While the majority of advisers support the Financial Advice Market Review (FAMR) measures in theory, there is scepticism around the impact they’re having on the advice gap, according to a new survey by Aegon.

The survey by the savings and investment provider found just one in seven (14%) of advisers felt the measures arising from FAMR are helping to close the advice gap. This figure came despite 33% agreeing that the key measures are beneficial, with just 14% disagreeing.

A substantial 70% of advisers surveyed agreed with the new definition of regulated advice linked to providing a personal recommendation, but two thirds (69%) did not feel it was helping to bridge the advice gap. Similarly, 44% showed support for the development of clearer guidance on what can be offered through streamlined advice, yet just 16% believed it is having a real-life impact.

Furthermore, almost half (47%) of advisers agreed with the FCA setting out what help employers and trustees can provide on financial matters, in the form of factsheets and guidance, without being subject to regulation, but just 8% said these new documents had proved helpful.

While around half of advisers expressed no view on a set rule of thumb, a third support them in practice but only 10% see them as being beneficial.

The trend was similar for Pensions Dashboards. Almost half of advisers (49%) agreed with the concept, with just 20% disagreeing, yet 45% said they did not think it would help close the advice gap with a further 27% unsure.

There was strong support (69%) for an increase in the income tax and National Insurance exemption for employer arranged advice on pensions, but still just 37% said they felt it was closing the advice gap, with 18% unsure.

With the FCA not set to review the impact of FAMR until 2019, Aegon described it as a “missed opportunity.”

Steven Cameron, director of Pensions, Aegon, said: “The FAMR presented a huge opportunity to address the advice gap. In today’s world, people more than ever before have to take responsibility for their finances and seeking advice is the best way to do this.

“Two years on from the publication of the FAMR report, advisers remain broadly supportive of the measures that emerged, be it the Pensions Dashboard or clearer guidance on what can be provided through streamlined advice.

“However, when it comes to how effective these have been in practice, the findings are very disappointing.

“The FCA’s Business Plan points to a review of the impact of FAMR and the RDR but not until 2019.

There’s clearly an opportunity for the industry and the FCA to keep working together to identify how to turn a major opportunity into widespread practical benefit.”

 

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