In August 2015 the FCA and HM Treasury launched the Financial Advice Market Review (FAMR) to examine concerns that the market for financial advice in the UK was not working well for all consumers.
The FAMR has explored the supply and demand sides of the market for financial advice and guidance, the barriers to consumers accessing these services and the potential remedies. The FAMR launched a public call for input on 12 October 2015.
HM Treasury and the FCA have now jointly published a final report which sets out its findings of the FAMR. The final report also sets out a series of recommendations intended to tackle the barriers to consumers accessing advice.
- the FCA and HM Treasury believe that the Retail Distribution Review (RDR) has brought about a positive step change in the quality of advice available to those with larger amounts to invest. However, they recognise that steps need to be taken to make the provision of advice and guidance to the mass market more cost-effective. A number of recommendations are made that are intended to allow firms to develop more streamlined services and engage with customers in a more effective way. These include a proposal that the FCA should set up a dedicated team to help firms developing mass-market automated advice models to bring these to market more quickly, and that HM Treasury should consult on amending the definition of regulated advice;
- the FCA and HM Treasury note that people often lack confidence when faced with decisions about their finances. They propose a number of measures to help consumers engage more effectively with advice. These include making their own information more easily available to them and those that advise them; the development of nudges to encourage customers to seek support at key life stages. The final report also recommends measures to help employers to give more support to their staff in financial matters; and
- the FCA and HM Treasury note that many advisors have raised concerns that future liability are preventing them from giving advice today. They recognise that concern but also the importance of consumer protection in building confidence in the sector. Recommendations are made that are intended to increase clarity and transparency about the way in which the Financial Ombudsman Service deals with consumer complaints. Recommendations are also made in relation to the funding of the Financial Compensation Scheme to assist advisers struggling to predict and budget for the levy they have to pay.
View Reforms will make financial advice and guidance work better for consumers, 14 March 2016