Pensions - Articles - The FCAs proposals for a new simplified advice regime

 “The latest FCA Consultation on ‘Broadening access to financial advice for mainstream investments’ is welcome recognition that something needs to change to address the support gap the current ‘regulated advice’ definition creates. The focus at this stage is relatively narrow – supporting individuals who might benefit from investing their ‘excess cash’ savings into a stocks and shares ISA. Financial adviser firms are likely to have more interest in the promised holistic review of the advice / guidance boundary which could open up a far wider range of new services to a broader range of customers.

 “We also hope the FCA will consider these proposals alongside the concept of more personalised financial guidance, as tabled by Harriet Harman MP.

 “The consultation, originally expected at the start of 2022, comes after an interesting year for assessing the relative attractions of cash versus stocks and shares. It’s hard to predict where interest rates, stock markets and inflation will be by the time this regime goes live.

 “These proposals also need assessed through the extra lens of the new Consumer Duty, which receives 36 mentions within the consultation. Any firm considering introducing the new service will want to be absolutely sure it will deliver good outcomes and avoid foreseeable harm. With a maximum investment of £20,000, the cost of simplified advice whether or not spread, will be a major consideration when assessing value. There is also a big question over how to provide ongoing support for those who through investment growth or year-on-year investments exceed the £20k limit, excluding themselves from the new simplified advice service in future.”