Deliver simple advice to the less well-off

There has long been concern amongst the financial community about affordable advice for those with limited capital, a situation made far worse by the heavy weight of regulation.

I have always been a supporter of improving the quality of advice and much of the necessary new regulations.

However those regulations have added substantially to the cost of delivering quality advice, not only that they have added to the time it takes just to transact a simply piece of business.

Time is money and there is the reason financial advice costs more than we would want.

To have a way to deliver simple advice to the less well-off has been a challenge too far.

Inevitably the majority of that “advice” was delivered by Bank Assurance, not Independent Financial Advisers (IFAs).

I am therefore delighted to hear that my local MP and Government Minister, Harriett Baldwin, is heading an enquiry into how to deliver affordable advice.

My plea to her is that it happens quickly, does not get buried in bureaucracy and never provides the Banks with a new opportunity to spoil the game.


From the Personal Finance Society …. Keith Richards, 03 August 2015

HM Treasury and FCA review welcomed.

I welcome the news that HM Treasury has instigated a review into the financial advice market as this follows a Personal Finance Society letter to the Chancellor on 1st July, requesting Treasury intervention. 

 I subsequently met with the Economic Secretary to the Treasury, Harriett Baldwin, last week to discuss regulatory cost and impact amongst other matters. To see immediate action being taken by the Government over such concerns is encouraging and a step in the right direction.

The Personal Finance Society raised initial concerns from a public interest perspective resulting from member reaction to the increasing and unsustainable regulatory burden being placed on the advice profession and the knock-on effect this has on the public and their ability to access professional advice.

Whilst the announcement today does focus a lot on improving accessibility to advice, there is a clear understanding at the Treasury that some of the key boundaries to this is the regulatory costs which are not only making it difficult for many existing firms to stay in business, but also acts as a deterrent to those contemplating entering the market.

Regulation is of course a key component in providing consumer protection and influencing good outcomes for the general public, but it is becoming increasingly unreasonable to continue with an outdated funding system that levies unfairly against a smaller number of contributors in a totally different post-RDR landscape.

Regulatory fines were originally intended to influence behaviors and additionally help fund regulation, thereby providing a dividend for the most compliant. Instead, all fines now go to the Treasury and the increased cost burden is being shared by a reducing pool of advisers.

The current funding system is also very opaque from a consumer perspective, with regulation, FSCS, MAS and Pension Wise all appearing to be free. The public deserve greater transparency and consistency with RDR principals, rather than costs being bundled into adviser charging structures making advice look disproportionately expensive.

The profession must, of course, make a proportionate contribution to regulation and consumer protection, but it is time to objectively review whether or not the current system is fit for purpose.

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