The FCA’s consultation focused on ‘Targeted Support’ reforms for pensions closed on Thursday 13 February (CP24/27: Advice Guidance Boundary Review – proposed targeted support reforms for pensions)
The regulator has set out plans to create a new Targeted Support framework, initially focused on pensions, with the aim of enabling financial services firms to provide groups of customers with tailored investment solutions based on their common characteristics
The proposals are central to tackling the UK’s ‘advice gap’, ensuring those who don’t take regulated advice are supported to make good decisions throughout their lives
A further consultation on delivering Targeted Support for retail investors is expected later this year
Embedding flexibility in the design of Targeted Support and providing reassurance about any potential liability will be crucial if the reforms are to be implemented successfully to the mass market
Tom Selby, director of public policy at AJ Bell, comments: “For well over a decade the financial services industry has grappled with the challenge of delivering better help and support to non-advised investors. Put simply, too few people are taking regulated advice and those who aren’t receive only generic guidance. This all-too-often results in people having to make complex financial choices without the help they need.
“The result of the status quo is that millions of people aren’t making the most of their pensions and investments. For example, the FCA has previously identified 8.6 million people with at least £10,000 of investable assets, half of whom it said could benefit from investing for the long term. Furthermore, the FCA’s Financial Lives Survey found three-quarters of people had no clear plan of how to access their retirement pot or didn’t realise they needed to make a decision.
“The proposed Targeted Support reforms have the potential to tackle these issues and more, enabling people to make better-informed decisions about saving and investing, boosting financial resilience and supporting the FCA’s Consumer Duty reforms, which centre on delivering good outcomes for customers. The economy should also be a substantial beneficiary if these reforms help spearhead a retail investing revolution in the UK.
“The proposals contained in the first consultation are extremely promising, focusing on giving firms flexibility to deliver suggestions to customers based on their knowledge of those customers. This should ensure Targeted Support suggestions can be designed in a way that benefits the mass market.
“Arguably the biggest risk to the success of Targeted Support will be the interaction between the new rules and the actions of the Financial Ombudsman Service (FOS). For firms to offer Targeted Support, they will need confidence that the FOS will judge any intervention on the process and intent of that intervention at the point in time it is delivered, rather than the individual outcome of any complainant over their lifetime. Explicit statements from the FCA and the FOS to this effect, along with non-binding guidance and examples of Targeted Support interventions, would help give firms this confidence and ensure the reforms are delivered as intended.”
|
