On 14 March 2016, HM Treasury and the FCA published the final report on the financial advice market review (FAMR), which was launched in August 2015 to identify areas for regulators and the government to help both consumers and the industry benefit from new and more cost-effective ways of delivering high quality investment advice and guidance.
The report sets out 28 recommendations intended to tackle the barriers to consumers hoping to access advice and are partly directed at the FCA and the government, and partly directed at employers, services providers and consumers, covering three key areas:
- Affordability: Recommendations to make the provision of mass market advice and guidance more cost-effective include:
- the FCA should extend Project Innovate, and set up a dedicated team to help firms develop large-scale automated advice models bring these to market more quickly;
- the FCA should consult on measures to support firms developing guidance services to help consumers make their own investment decisions; and
- the government should consult on amending the statutory definition of regulated advice so that it must be based on a personal recommendation, in line with the definition set out in the Markets in Financial Instruments Directive (2004/39/EC) (MiFID). This would create a single definition for regulated financial advice, and remove some of the barriers that exist for firms wishing to offer guidance services.
- Accessibility: Recommendations to help consumers engage more effectively with advice include:
- making consumers' own information more easily available to them and those who advise them, and the use of nudges to encourage customers to seek support at key life stages; and
- measures to help employers give more support to their staff on financial matters.
- Liabilities and consumer redress: The report also included recommendations to increase clarity and transparency about the way in which the Financial Ombudsman Service (FOS) deals with consumer complaints and the funding of the Financial Services Compensation Scheme (FSCS) to provide greater certainty for advisors regarding their future liability while maintaining robust consumer protection.
The FCA and HM Treasury are asked to report on progress made in 12 months, and then to review the outcomes of the FAMR in 2019.