Speaking in front of the Treasury Select Committee (TSC) on September 9, Martin Wheatley said the FCA wanted to ensure it is not a barrier to innovation but that, “whatever” the extent of the advice gap, “people will innovate and fill” it.
In July, the FCA opened a consultation examining what constitutes a personal recommendation.
It was one of a number of steps taken by the regulator to tackle what it calls an ‘expectations gap’ between it and regulated firms and individuals.
It wanted to know whether firms are “shying away” from providing products or services that would benefit customers for fear of falling foul of the FCA’s rules.
This includes products or services designed for those ‘orphaned’ from advice following the RDR, which banned commission payments on retail investments and prompted many firms to change their business models.
Wheatley said he was concerned that people have access to the services they need, and part of its plan in consulting on advice boundaries was to potentially kick-start advisory models which could provide regulated services to the mass market.
“Whatever the numbers [of orphaned clients] are, people will innovate and fill those gaps,” he said.
Wheatley rebuffed a suggestion from the Committee that the industry had a negative reaction to its consultation.
“There were a few critics, but most of the reaction has been people saying ‘at last, a regulator is prepared to listen’. I agree that [the consultation] didn’t answer questions, [but] it wasn’t intended to.”