The FCA has published a speech delivered on 21 March 2023 by Therese Chambers, Director of Consumer Investments at the FCA.

The speech comes in the context of:

  • The closing of the FCA's consultation paper (CP22/24) at the end of February detailing proposals for a new core investment advice regime, aimed at facilitating greater consumer access to simplified advice on investing in mainstream products (specifically within stocks and shares ISAs).
  • The impending review of the boundary between advice and guidance to be carried out jointly by the FCA and the Treasury.
  • The intended effect of the Consumer Duty on the way firms fundamentally think about and treat their customers.

The speech emphasises the FCA's ambition to ensure a healthy and successful consumer investment sector in which firms can thrive and consumers can make informed choices about financial products and services. Particular points to note include:

Core investment advice regime

  • The purpose of the proposed core investment advice regime is described as facilitating a market where firms can better support consumers with simpler needs and enable them to make effective decisions on whether and how to invest or not.
  • Consultation responses reveal that many firms are keen to do more in this area and support the premise of a core investment advice regime.
  • The FCA recognises the need to offer as much regulatory clarity for firms as possible and understands some of the concerns that have been raised around the limitations of the "target market" definition.
  • The FCA also understands that some firms may want to see the outputs from the advice/guidance boundary review before committing to implementing the new core investment advice regime.

Advice/guidance boundary review

  • The purpose of the forthcoming holistic review of the advice/guidance boundary is for the FCA to gather a detailed understanding of how the boundary is operating and its impact on consumers.
  • The FCA recognises that in some cases the regulatory regime is too burdensome and can act as a barrier to firms delivering services to consumers that they want and need.
  • Both accumulation products (including GIAs, ISAs and pensions wrappers) and decumulating assets (including pensions decumulation) will be within the scope of the review.
  • Defined benefit pension transfer advice, even below the £30,000 threshold, will be excluded from the review alongside any other pensions that have safeguarded benefits such as guaranteed minimum pension or a guaranteed annuity rate.
  • In light of the Consumer Duty, the FCA thinks that there is more firms could be doing within the existing framework and that consumer outcomes may not be most effectively supported by firms taking a conservative approach to managing risks relating to the advice/guidance boundary.

We want to build a retail investment market which consumers can trust, and which is sustainable for firms, recognising that the complexity that consumers face in making financial decisions has never been higher and their need for help has never been greater.