The Financial Conduct Authority (FCA) is asking for feedback on its proposed approach to reviewing the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR). There was also another review called the Mortgage Market Review (MMR).
MMR came in the aftermath of the banking collapses in 2008/09 with toxic mortgage debt. RDR and FAMR were wider reviews of the financial advice market initially to do with professionalising the industry with fee disclosure for advice and defining advice, non-advice, execution only, guidance, independence and restricted services.
The FCA wishes to consider whether these initiatives have been successful in achieving their objectives. The review will look at what consumers want from the market and how the market works to deliver this. It will also consider how new market trends and developments might affect the future development of advice and guidance services. For example, technology has moved on and so called intergenerational finance has changed with advice being expensive, many consumers not able this through to the use of technology, financial applications and software and direct to consumer guidance and non-advised artificial intelligence.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA said: “Millions of people look for help and support in making financial decisions every year and the aim of the RDR and FAMR was to help the market develop the right advice or guidance service consumers need to make those decisions. Consumers and the market are changing rapidly, as technology, employment patterns and inter-generational challenges change the way consumers interact with financial services. As well as looking at how the market has evolved since RDR and FAMR, it’s important that our work looks ahead to see how we ensure that this important sector works well in the future. We want the market to deliver a range of good quality, affordable advice and guidance services that meet consumer needs.”
Whilst making the finance industry more transparent, the above reviews have also made access to quality advice more difficult. More difficult for the consumer but also more difficult for advisers with ever increasing liabilities on costs, compensation scheme levies, professional indemnity insurance, claims management companies and red tape. Is it any wonder that advisers are leaving the industry in droves and many refuse or are unable to offer advice on a wide range of areas. We suggest there is a likely ‘U-turn’ on the way with more flexibility available for guidance only services with lower levels of liability and therefore perhaps lower consumer fees.