FCA proposes changes to the financial advice regime

These proposals, the regulator said, will create a “separate, simplified” financial advice regime – making it cheaper and easier for firms to advise consumers about certain mainstream investments within stocks and shares ISAs.  

It follows the FCA’s recent financial lives survey which found that 4.2 million people in the UK held more than £10,000 in cash and are open to investing some of it. And, while keeping a cash buffer is a sensible way of dealing with unexpected expenses – consumers who hold significant amounts of excess cash may be damaging their financial position, as inflation reduces the value of their saving.  

Off the back of this the regulator has set out proposals designed to prevent in-person financial advice from being too costly as this can stop people from investing when it may be in their interest to do so.  

The FCA’s executive director of markets Sarah Pritchard said: “Now more than ever, people across the UK should have access to useful and affordable financial products and services which can improve their quality of life and support the economy.  

“These proposals are part of our work to deliver a consumer investment market where people can readily access support and firms aren’t deterred from providing it.” 

Among areas it’s consulting on, the regulator is looking to streamline the customer “fact find” so advice is more straightforward for both firms and consumers and limit the range of investments within the new regime, so the advice is easier to deliver and understand.  

It’s also looking to make the regime’s qualification requirements more proportionate so delivering the simplified advice is less costly for businesses, and allow advice fees to be paid in installments so consumers aren’t burdened by large upfront bills.  

Responding to this, the Personal Finance Society’s director of policy and public affairs Dr Matthew Connell said: “In terms of qualifications, the FCA’s proposals build on current rules, where advisers can give advice under supervision for four years while studying for the qualifications needed to become a retail financial adviser.  

“We envisage that many advisers in the new category will go on to achieve qualifications to become a full retail financial adviser over time.”