PIMFA believes more can be done to help UK savers and provide an element of support for those who are not currently engaged and may have sums of cash that could be made to work harder and offer greater reward but are currently depreciating in a high inflation economy.
PIMFA believes widening access to advice can only be achieved by giving advice firms the ability to sit down and actively engage with consumers to help them overcome some of the basic barriers they have towards investing such as behaviours, perceptions or less exposure/access to financial education.
In a policy paper entitled: “Up on the Ladder” outlining its proposals for a Simplified Advice structure that would benefit a greater number of UK consumers, PIMFA argues that there is a clear disconnect between the number of people who could reasonably invest a portion of their savings and the number that do.
The clear driver of this disconnect is a failure to support consumers in making complex financial decisions as the only options available to them are guidance or full financial advice, as current strict suitability requirements prevent financial advice firms from offering a simple, cost-effective service to UK consumers.
PIMFA is urging the Government and the FCA to consider creating less stringent suitability requirements for clients that have demonstrably simple needs, allowing them to be presented with solutions which suit those needs. PIMFA believes this could be achieved through a Simplified Advice process – a new regulatory requirement as set out in the Handbook – which enables firms and advisers to extract basic information from clients within a restricted set of questions and recommend products and services as a result.
Outlining a solution, based on a restricted fact find, should not only give consumers confidence to proceed, but also ensure they are placed in a solution which is good for them, not just good enough for most people as is the case with guidance today.
Liz Field, Chief Executive of PIMFA commented: “Ongoing, bespoke financial advice will create the best financial outcome for UK consumers. However, the gap between what is in the absolute best interests of the client and what would almost certainly be better than doing nothing at all, remains far too great and we believe that it should be incumbent on UK policy makers to work towards closing it.
“Creating a simplified advice process which allows firms to diverge from current suitability requirements to support clients in making decisions which will likely be good for them should provide a cost effective and easy to navigate way for firms to provide a simple, tailored solution across a restricted set of simple products and services.
“PIMFA is committed to closing the advice gap in the UK. At present, we believe that the options available to consumers are too binary. It makes sense to us to seek to put another step on the advice ladder to help UK consumers bridge the gap between being guided towards what people like them could do and what it is absolutely in their best interests to do.”
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