In a speech today, Therese Chambers, director of consumer investments at the FCA, said the regulator would soon carry out a review of the boundary between advice and guidance with the Treasury.
She said while it was important to appropriately protect consumers, it was clear that “in some cases the regulatory regime is too burdensome and that can conversely act as a barrier to firms delivering services to consumers that they want and need”.
Chambers said the “holistic review” would aim to reduce the “burden of regulation, where it is proportionate and practical to do so, if this allows for “better consumer outcomes to be achieved”.
She confirmed that accumulation products would be within the scope of the advice and guidance boundary review. This include general investment accounts, individual savings accounts and pension wrappers.
However, advice for defined benefit transfer or pensions such as Guaranteed Minimum Pension or a Guaranteed Annuity Rate would not.
She said the review would start from a blank canvas with a view for products and services to work for consumers as intended.
“As such I want to reiterate that the ‘consumer voice’ is at the forefront of our thinking,” she added.
Chambers said the review was a “substantial piece of work” which would take time.
She added: “Together with the Treasury, we are also considering how to organise our engagement with industry as part of this review, beyond the usual engagement we both have with industry to hear all your views and take these into consideration as we shape the review.
“We are also working to bring forward opportunities for more formal input setting out the options that we may be considering and seeking views on the range of issues at play. We will share details and timings on this in due course.”
Consumer Duty
Chambers said Consumer Duty underpinned the FCA’s work and firms were making good progress at implementing the rules.
She said: “We have heard that some firms are nervous about providing support to their customers once they are in possession of personal information, as any support could then be seen as a personal recommendation, and therefore regulated advice.”
Chambers said firms could be doing more within the existing framework. She added that the elements of Consumer Duty meant some consumer outcomes would not be effectively supported by a “conservative approach to managing risks from the [advice] boundary”.
She added: “Under the current regime firms can provide information to their customers to enable them to understand their options and the risks and consequences of any decision.
“We would already expect firms to be supporting customers in this way, but the Consumer Duty’s focus on good outcomes, including avoiding foreseeable harm, emphasises this.
“I recognise this only goes so far to get the best outcome for customers as they are still left to make their own decisions.”
