Consumer access to the financial advice market is under review by HM Treasury and the Financial Conduct Authority (FCA). The new Financial Advice Market Review (FAMR) is intended to ensure that less wealthy consumers get access to financial advice.
This has to be good news and most professional advisers will welcome this s a real opportunity to make financial services work better for all.
Increasing regulation and costs have meant the professional financial advisers are less and less able to advise most people. It’s like imposing expensive controls until it is impossible to do the job that is being controlled – and the regulators seemed to think that a government web site offering information would do the job.
- Examine the ‘advice gap’ for those people who want to “work hard, do the right thing and get on in life but do not have significant wealth”;
- Ensure the regulatory and legislative environment allows and encourages firms to innovate and grow their business models to include affordable and accessible financial advice;
- Consider ways to encourage people to seek financial advice, addressing unnecessary barriers that currently deter them.
Acting FCA chief executive Tracey McDermott will lead the review and director general of financial services at the Treasury, Charles Roxburgh, will examine all products including pensions, savings, mortgages, and insurance, reporting before the 2016 Budget.
In its article, The Professional Adviser, it says that the FCA and government said the review will seek to come forward with and six areas. All seems laudible and hopefully will significantly improve access to financial products whether with or without advice.
The Treasury said it wanted to make sure people can access high-quality, affordable, tailored advice and guidance to help them make informed financial decisions. The current supply of high-quality advise could be a lot more affordable if the advisers were not so burdened by regulation and costs, levies and the plethora of rules and administration required to comply.
Chris Hannant, director general of the Association of Professional Financial Advisers said his organisation had “long been campaigning” to reduce the significant regulatory burden on advisers. “We welcome government recognition of the need to examine the legislative barriers to accessing affordable financial advice. We believe there needs to be a fundamental rethink of the current regulatory environment.”
He added: “Consumers need to understand that investments can never be 100% risk-free. We look forward to continuing to work with HM Treasury and the FCA as part of this review and elsewhere to ensure liability is assigned more fairly and that steps are taken to minimise the cost of regulation for professional financial advisers.”
The outcome of this review could have a major impact upon access to financial services for consumers and to more affordable quality professional advise for those who want it.