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ABI response to the FSAs guidance consultation on simplified advice

The ABI has today responded to the FSA's guidance consultation on simplified advice. In its response, the ABI stressed the need to allow more consumers to have their financial needs and wants addressed.  

Maggie Craig, Director of Financial Conduct Regulation, ABI, said:
"We have consistently supported the RDR, not least because we hope it will increase consumer confidence in financial advice. But a core objective of RDR was to widen consumer access to financial products and currently that is the missing link. For it to be a success, we need a viable simplified advice model.

"The proposals put forward by the FSA are a step in the right direction but more needs to be done to ensure that consumers have their advice needs met. We urge FSA to work with the industry and consumer groups to make simplified advice work."  

ABI research in 2010 into the cost of advice found that ‘full' financial advice typically takes seven hours and 40 minutes to deliver end-to-end and costs £670 in total.  This is beyond the reach of two-thirds of the UK adult population.   

A recent ABI consumer survey suggests this advice gap could be exacerbated by adviser charging. The survey found that 48% of consumers would be unwilling to pay for professional financial advice, and a further 35% were only willing to pay less than £100 for financial advice.  This suggests there needs to be an affordable alternative for consumers with more straightforward needs.  

The ABI believes that the draft guidance on simplified advice is a step forward. It recognises the benefits of a well-designed, low-cost method of meeting consumers' straightforward investment advice needs, and it addresses industry uncertainty about aspects of the regulatory regime.  

The ABI has suggested a number of changes to improve the framework to make it more commercially viable for a large number of firms to help tackle the advice gap. These changes focus on the role of an individual facilitating the process and the level of assessment of a consumer's individual broader circumstances a simplified advice process is required to undertake.    

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Last updated 01/07/2016