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FCA to issue guidance on streamlined advice models – FAMR

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  • 14/03/2016
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FCA to issue guidance on streamlined advice models – FAMR
Advisory firms are to be given clearer rules on how to offer streamlined advice to consumers with a single focus such as a protection following the Financial Advice Markets Review (FAMR).

The review found that consumers with simple, specific financial needs wanted access to a streamlined regulated advice process, which side stepped a full fact find of their wider circumstances to help cut down the cost of advice.

The recommendation is part of a package of reforms suggested by FAMR which the Financial Conduct Authority (FCA) and the Treasury must act upon.

Rules currently exist allowing firms to offer focused advice but uncertainty about how to create a model that does not consider the customer’s wider circumstances has held many back from launching streamlined advice.

The review outlined four examples of when streamlined advice may be more suitable for consumers than a full fact find of all their circumstances:

  • A new parent looking to purchase protection to safeguard their family against potential misfortune in the event of their death, disability or sickness
  • A 24-year-old wanting to know whether to save or invest for a deposit for their first house purchase in 10 years’ time
  • A grandparent looking to invest a lump-sum for their new-born grandchild’s future education
  • A 30-year-old looking to start making regular contributions into a stocks and shares ISA in order to invest for a medium to long-term objective.

The FCA has been asked to produce a series of case studies which address firms’ concerns over developing a compliant simple advice process.

Further recommendations from the review include giving consumers early access to a small part of their pension pot to be able to pay for advice costs and a dedicated team set up by the FCA to help firms seeking to develop large scale automated advice models – so-called robo advisers – to bring them to market more quickly.

The FCA will consult on guidance to support firms that want to offer a streamlined advice process by early 2017.

 

 

 

 

 

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