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ABI Clarity needed from FSA to ensure wider access to financial advice

The FSA must act quickly to secure the benefits of its changes to the financial advice market, says the ABI.   The message comes in the ABI's response to the FSA's Retail Distribution Review (RDR) consultation.

 

The ABI supports the principles of the RDR, which aim to widen access and improve the service consumers receive when accessing financial advice and investment products. The ABI supports the FSA's plans to introduce Adviser Charging, under which firms would set and disclose their own charges, rather than receiving commission from product providers.  This would remove any bias, real or percieved, from the process and help rebuild consumer trust in financial advice.  The ABI also supports the FSA's proposals to increase the professionalism of advisers.

 

However, an unintended consequence of the reforms could be to restrict consumer access to advice.  To avoid this, the ABI has proposed the development of simplified advice processes to meet the needs of consumers who are unable to afford, or do not require, full advice.   To enable firms to develop these services, greater certainty is need from both the FSA and the Financial Ombudsman Service on how these processes would be judged.  Current FSA proposals for an individual facilitating this service to obtain the same qualification required as full financial advisers, would also prevent these processes being delivered at an affordable price.

 

Maggie Craig, the ABI's Director of Life and Savings, said:

 

"We have come a long way on the road to developing a clearer and more transparent advice market.  However, as we get closer to the introduction of RDR reforms in 2012, the FSA must realise that firms need clear rules and guidance now.  Given direction, firms can develop simplified advice processes, ensuring as many people as possible have access to financial advice.

 

"The ABI has supported the objectives of the RDR since it began in 2006 and we continue to believe these changes are essential to rebuild consumer confidence in the retail investment market."

 

The ABI is also keen to ensure that the proposed RDR changes are not automatically applied to the protection market, unless it can be shown that doing so would benefit consumers.   The RDR was developed to tackle problems in the investment market, which do not necessarily exist for protection business.  Applying some of the RDR changes to the protection market would have an immediate and significant impact on consumers' ability to access advice on these products.

 

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Last updated 01/07/2016