Treasury and FCA have published the results of the Financial Advice Market Review (FAMR) launched in August 2015 (see FReD 7 August 2015). It sets out 28 recommendations to increase the accessibility and affordability of the advice and guidance that consumers want and need at all stages of their lives. The review found a clear need for intervention by the regulator and the government to help both consumers and industry to benefit from new and more cost-effective ways of delivering high quality advice and guidance. It builds on changes already made in the Retail Distribution Review. FAMR recommends a Financial Advice Working Group, comprising its Expert Advisory Panel and members of the FCA Consumer, Practitioner, and Smaller Business Practitioner Panels work together. FAMR’s recommendations focus on three key areas:
- affordability: nine recommendations on affordability include revisiting the definition of “regulated advice” to bring it into line with MiFID (and then to ensure implementation of the revised Markets in Financial Instruments Directive (MiFID 2) does not undermine FCA’s initiative to allow firms to deliver streamlined advice), encouraging FCA to consult on guidance to support firms helping customers make investment decisions without a personal recommendation, improving suitability reports and clarity of information and urging FCA to build on the success of Project Innovate;
- accessibility: a further nine recommendations look at help for employees, particularly on pensions advice, ensuring firms understand the adviser charging regime, developing new terms to describe “guidance” and “advice” and assigning responsibility for “rules of thumb” and “nudges” to an appropriate body; and
- liabilities and consumer redress: FAMR makes seven recommendations to increase clarity and transparency about the way in which FOS deals with consumer complaints. It says FCA should not introduce a longstop limitation period for referring complaints to FOS. It also makes recommendations in relation to FCA’s review of funding of the FSCS to consider alternative funding classes and approaches.
Finally, FAMR recommends FCA and Treasury work together to develop a method to monitor the advice market which they can then track each year. They should report progress to the Economic Secretary and the FCA board in a year’s time. FCA has published the non-confidential responses received to the consultation on its FAMR page. (Source: Treasury publishes FAMR and FCA publishes FAMR responses)