Nobody seems to have read the FCA's consultation on investment advice. Which is a shame, because it is modestly interesting – as these things go.
So far the bulk of the FCA’s output has been in the form of thematic reviews. These have been generally well researched and balanced reports. They include helpful pointers on the views of the regulator. But by their nature they are backward-looking.
Now for the first time we have some thinking about the future.
The stated purpose of the FCA document is clarification. Clarification about what is or is not a personal recommendation; clarification of the tipping point between regulated advice and execution only services; clarification about the regime for limited advice. This is all valuable stuff – though it does show us how very complicated the EU regulations are that underpin the FCA’s Handbook.
But, on careful consideration, it appears that the paper may go a little further than clarification. Reading between the lines, the FCA may have been thinking about the impact of technology. Commenting on the piece, Chris Woolard says:
"We want to ensure we have innovation in the advisory market and new, lower-cost options available."
He also says:
"We believe that a healthy retail investment market is one in which there are a number of different distribution models to suit a broad range of investors. We want to give firms the confidence to innovate to achieve that."
This almost sounds like a vision of the future, and a nudge to the industry about where the future lies. If so, the timing could not be better. The Budget’s changes to retirement income, and the introduction next year of the Guidance Guarantee, will have a much better chance of delivering good outcomes for savers if they go hand in hand with a re-think of the regulatory environment.
There are hints that there may be even more radical thinking yet to come. We are promised further material on giving firms greater confidence to provide shorter and more useful disclosure material; also on the role of the FCA’s own guidance in supporting innovative services.
Now, the FCA publishes a lot of documents, and these may be straws in the wind, but I just wonder if there might not be some more fundamental thinking at work here. Could we be looking at the start of a fresh look at promoting effective competition in the interest of consumers? Is this is a turning point in the development of the FCA as a conduct regulator? If so, the FCA deserves greater credit for it.
Hugh Savill is Director of Regulation, Association of British Insurers.