UKSA has responded to the FCA consultation ‘Broadening access to financial advice for mainstream investments’. The consultation pays more attention to creating an additional market for the industry than it does to helping individual savers.
The consultation creates a new category of regulated advice – ‘Core Investment Advice’ – for a tightly defined investment situation. UKSA’s response points out that the industry – burdened with regulatory costs – will be unable to profitably provide the simple guidance needed. That leads to the risk that it will be motivated to help only those consumers who offer a prospect of further business or who can be persuaded to invest in products that deliver other benefits to the adviser.
The consultation errs further by placing insufficient restrictions on the products that can be recommended, in a situation where only a low-cost well-diversified index fund makes any sense. Neither is there any restriction on product charges.
UKSA believes that the way forward is to remove the restrictions that prevent reliable organisations such as UKSA from helping individual savers and offer a reliable unconflicted source of financial learning such as UKSA’s HonestMoneyNow.
Below are some quotes from UKSA’s response:
Paradoxically, Government’s desire to protect consumers from unqualified financial advisers has led to a regime which makes it legally extremely problematical for organisations like ours to unambiguously help consumers about financial products including the naming of specific products, even when we are free from all conflicts of interest and would be seeking to do so as an act of public service.…
The same point applies even more strongly to employers and to the trustees of employer-sponsored pension schemes. They should be free to provide such guidance to their employees / pensioners.…
Instead of looking at the entire problem from a first principles consumer perspective, the current consultation could be read more as an idea to help the financial sector grow its advice business by adding to the universe of potential consumers of financial advice.
