On 3 August, the UK Government launched what it described as a major new review to examine how financial advice could work better for consumers.  The review will consider:

  • the “advice gap” for those who do not have significant wealth;
  • the regulatory or other barriers firms may face in giving advice and how to overcome them
  • how to give firms the regulatory clarity and create the right environment for them to innovate and grow;
  • the interplay between the regulatory framework for advice and the role of the Financial Ombudsman Service (FOS) and the Financial Services Compensation Scheme (FSCS) in redress;
  • the opportunities and challenges that new and emerging technologies may present to provide cost-effective, efficient and user-friendly advice services; and
  • how to encourage a healthy demand side for financial advice, including addressing barriers which put consumers off seeking advice.

The review will be co-chaired by Tracey McDermott (acting CEO of the FCA from 12 September), and Charles Roxburgh, Director General of Financial Services at HM Treasury, and supported by a secretariat drawn from staff at FCA and HMT.

A separate expert advisory panel, led by NickPrettejohn, Chairman of Scottish Widows Group, with 12-15 senior figures representing financial services providers, financial advisers and consumer representatives, will feed into the work of the review.  The format is similar to that adopted for the Fair and Effective Markets Review earlier this year.


The initial evidence gathering will request examples of problems in obtaining advice in the following markets:

  • investments, savings, pensions, and retirement income products (including annuities)
  • mortgages (including Help to Buy and equity release) and consumer credit
  • general insurance

The Terms of Reference of the review also flag the possibility that a number of the review’s recommendations could have applicability in other financial services markets.


The review has been tasked with producing

  • a package of reforms to:
    • empower and equip all UK consumers to make effective decisions about their finances
    • facilitate the establishment of a broad-based market for the provision of financial advice to all consumers
    • create an a regulatory environment which give firms the clarity they need to compete and innovate to fill the advice gap
  • set of principles to govern the operation of financial advice
  • measures to ensure standards of behaviour for firms within all types of financial advice markets are in accordance with those principles
  • consideration as to whether the regulatory perimeter for financial advice should be amended (taking into account European legislation)
  • an examination of the role that might be played by regulatory carve-outs (e.g. safe-harbours)
  • a consideration of the proportionality of rules and their impact on affordability and availability of financial advice and products
  • indications of:
    • the resources needed for implementation of these proposals; and
    • a framework for evaluating how successful reforms have been in closing the advice gap, post implementation.

Next steps

Initial work and evidence gathering will be undertaken over the summer with a view to producing a consultation document in autumn 2015.  This means firms will be expected to engage with this consultation as they review and respond to ESMA’s proposals for MiFID II technical standards (publication of which has been delayed from July to September).

The consultation exercise will close by end 2015 with a view to producing proposals ahead of Budget 2016.

The government noted that it also intends to consult later in 2015 on how the current statutory arrangements for the provision of free and impartial financial guidance (including the Money Advice Service and Pension Wise) can be made more effective.