Investment companies welcomed the news of review on the advice / guidance boundary by the Financial Conduct Authority.
In a speech on Tuesday, FCA executive director Sarah Pritchard said the review will aim to understand “how to reduce regulatory burden while continuing to provide the right level of consumer protection.”
Tom Selby, head of retirement policy at AJ Bell, said people who do not take advice need better, more personal guidance to enable them to make good financial decisions.
Selby said: “The cost-of-living crisis and ructions in currency markets are dominating the headlines right now, with millions of savers and investors bombarded with information from all angles and facing often complex choices about what to do with their money.
“Those who are willing and able to pay for regulated advice are well served by the market and should be able to navigate through the current storm with a clear-minded focus on the long-term.
“However, those who do not take advice need better, more personal guidance so they can make financial decisions which are more likely to lead to ‘good outcomes’, in line with the FCA’s Consumer Duty.”
Selby called upon the regulator to undertake its review quickly, citing a “culture of fear” as preventing firms and employers from offering guidance, leaving people with less help to make decisions.
Selby commented: “Although there will always need to be a boundary between advice and guidance, firms need a clearer understanding of where that boundary sits and what they can and can’t do. The Financial Ombudsman Service needs to be included within this review process, as its interpretation of FCA rules will go a long way to determining how far firms are willing to go when providing guidance to customers.
“Ultimately it may require legislation from Government to address the current advice/guidance impasse, but the announcement of this review is at least a step in a positive direction.”
Hargreaves Lansdown also welcomed the review, stating that the current advice boundary acts as a barrier to its ability to guide clients towards better outcomes.
Anne Fairweather, head of government affairs and public policy at Hargreaves Lansdown, commented: “Whether it is pointing clients to a lower cost index tracking option or reducing the risk that clients run out of pension savings too soon, there’s a bigger role firms can play supporting their customers. This review is a big opportunity to demonstrate how innovation and data analytics can guide people with their financial choices. We see this as a crucial step to help savers and investors in the cost-of-living crisis and support the nation as we rebuild our financial resilience in the longer term.”
According to Hargreaves Lansdown, the market is at an “inflection point”, with client expectations and demands heightened by the pandemic, while the service gap is widening, regulation is shifting and technology is transforming.
Fairweather added: “From where we sit as the market leader, there’s a huge untapped opportunity to help the UK build financial resilience, especially against the backdrop of continued economic uncertainty and concerns about the basic costs of living.”
To help meet the need, Hargreaves Lansdown is strengthening its proposition with the expansion of its Investment Solutions and the launch of its Augmented Advice and Guidance service.
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