HM Treasury has issued a press release outlining seven ways the Government is aiming to improve consumers’ access to financial services.
These seven ways are:
• Opening a consultation into amending the definition of regulated advice used under the Regulated Activities Order. The intention is to amend this legislation so that only advice which involves giving a personal recommendation to a client will be classed as regulated advice. The simple act of an authorised firm giving general guidance to an individual would no longer be regarded as regulated advice
• The Financial Conduct Authority (FCA) has set up an ‘Advice Unit’, which is currently working with nine firms to assist them with the development of online advice systems
• From April 2017, the first £500 of the cost of any pension advice arranged through an individual’s employer will be exempt from National Insurance and tax
• From the same date, it is anticipated that consumers will be permitted to withdraw £500 tax free from their defined contribution pension pot before the age of 55, so that they can put the money towards paying for retirement planning advice
• By 2019, consumers will have access to a Pensions Dashboard, where they will be able to see the value of all their separate pension pots in one place
• Before the end of 2016, the FCA will commence a consultation looking at options for reforming the funding of the Financial Services Compensation Scheme (FSCS). At present the FSCS – which provides protection for customers if their financial provider becomes insolvent – is funded by a levy to which all authorised firms must contribute.
• The Treasury has created a Financial Advice Working Group, made up of consumer and industry experts. This group is currently charged with: creating a guide to the top 10 ways to support employees’ financial health; producing documentation that will assist consumers to understand the difference between ‘guidance’ and ‘advice’ and decide which is appropriate for their circumstances; and examining ways in which consumers can be prompted to seek financial advice when they need it
Other recommendations of the Financial Advice Market Review – jointly set up by the FCA and the Treasury to look at issues concerning access to financial advice – include:
• The FCA should issue guidance to firms on how they can offer ‘streamlined advice’ and still meet regulatory requirements, guidance which should include a series of illustrative case studies. Firms have previously suggested they could limit the costs of giving advice if they were able to carry out ‘simplified advice’ focussed on a single need area, but have been wary of how the regulator and the Financial Ombudsman Service might view the matter
• Trainee advisers should be allowed to give advice under supervision for four years, up from the existing two and a half years, before being required to pass an appropriate Diploma qualification
• The FCA should work with the industry to look at reducing the length of suitability reports
• The FCA should review availability of professional indemnity insurance for smaller firms
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.