FCA Commences Review of Financial Advice Market

The Financial Conduct Authority (FCA) has commenced a review of the state of the financial advice market in the United Kingdom, to determine how well it is delivering on positive consumer outcomes.
 
The review will explore the effectiveness of two major changes that were intended to improve distribution of financial services products to retail investors:

1. Retail Distribution Review (RDR) - in effect from 2012. Raised adviser standards, banned commissions as payment for advice and change disclosure of charges.
2. Financial Advice Market Review (FAMR) - launched in 2015 to address concerns that the financial advice market was not working well for all consumers.

The FCA says it is acutely aware that an 'advice gap' emerged under RDR, when it became unviable for an adviser to deal with small investors. The FAMR was meant to address this problem, but has not made the difference that was hoped for. This has meant that many people who have needed advice have failed to receive it.  
 
A key focus of the review will be distinguishing guidance from advice, and determining the role that guidance can play in helping to reduce the need for advice.
 
The FCA also says it's recognising that consumers and the market for financial services are both changing rapidly amid technological advances, changing employment patterns and inter-generational wealth transfers.
 
The industry is being invited to submit comment on these matters to the FCA, with a final report to be published in 2020.

Posted: 1/06/2019 12:00:00 AM by PlanPlus Global