On 11 October 2024, the Financial Conduct Authority (FCA) published a speech, ‘It’s good to be different: the new FCA supervisory strategy for the financial advice sector’, which was delivered by Nick Hulme, the FCA’s head of department, advisers, wealth and pensions, consumer investments.
The speech explains the FCA’s new supervisory strategy in relation to financial advice, which Mr Hulme notes follows the FCA’s forward-looking mindset as well as its need to be different. The strategy has three ‘buckets’:
- Reduce and prevent serious harm: This covers four parts – retirement income, ongoing advice, capital deduction for redress (‘polluter pays’), and consolidation.
- Test and monitor under the Consumer Duty: The FCA plans to provide challenge and act assertively with bad actors where it is concerned there are bad and poorly evidenced outcomes. However, as it is has begun to do in recent months, the FCA’s role under the Duty will also aim to nurture more and provide support in getting it right by sharing best practice (and in time data) to raise standards overall.
- The Advice Guidance Boundary Review: A consultation paper focused on pensions is planned for 2025, as well as a further consultation paper on retail investments. In the meantime, Mr Hulme urges firms to engage with the Review.
Mr Hulme also highlights that the FCA continues to focus on good client outcomes, taking a less prescriptive and, through the Consumer Duty, more outcomes-based approach to regulation. It aims to give firms (from sole traders up to the networks and nationals) the flexibility to innovate in service of their clients in a way that fits their size and client base more easily.