The regulator has told the Treasury Select Committee (TSC) it may revise its guidance so consumers buying via the web know when they have been advised and when they haven’t.
Details of the FCA’s concerns are outlined in a TSC paper, published on Friday, which, among other things, examines a promise made at Budget 2014 that all retirees will have access to face-to-face ‘guidance’ on their income options.
Though that referred to unregulated guidance, it has been put forward by many organisations that the development of online advised propositions will help to meet an anticipated increased demand for regulated advice as a result of the Budget changes.
But the FCA has told the TSC it is concerned the public may find it difficult to determine between advised and non-advised online, which in turn has implications due to the greater protections afforded to the former.
A spokesperson told the TSC: “It is a real concern because the distinction between a product which is advised on the web and execution-only on the web is not a distinction that people naturally and easily can determine.
“We are spending quite a lot of time talking to the industry about whether we need to revise our guidance to make products fall very clearly into one class or the other.”
Working group
The ‘guidance guarantee’ promised by Chancellor George Osborne at Budget 2014 does not refer to regulated advice. An FCA working group is currently examining how guidance could be delivered to the thousands of people reaching retirement age each year. Some, including the Personal Finance Society, have drafted proposals which would include advice firms in the delivery of retirement guidance.
The TSC has also recommended that any guidance observe six key principles. It said it should be demonstrably impartial as to providers and type of product; that it include at least an initial opportunity for face-to-face guidance; that it is free at the point of use, with the costs of such provision made transparent; that it make clear to every consumer exactly what is being offered, the limitations of the guidance, and what protection it gives consumers in the event of detriment; that it is offered from at least 12 months in advance of the consumer’s stated retirement date; and that it be co-ordinated with government-sponsored guidance relating to long-term care.
