New consultation on the definition of financial advice
HM Treasury and the Financial Conduct Authority (FCA) have been working together since August 2015 examining various options to improve access to financial advice for individuals especially those who have significant wealth or income. This research took place under the umbrella of the Financial Advice Market Review (FAMR) which looked at ways to provide people with timely financial advice that is free and impartial.
The review recommended a package of reforms to provide consumers with affordable and accessible financial advice. One of these recommendations stated that the government should consult on amending the definition of regulated advice and a new consultation to explore this issue was launched earlier this month.
The FAMR found that many firms were unwilling to provide financial advice to consumers with ‘simple’ needs. A key reason for this reluctance is concerned with issues over the provision of regulated advice without meeting the higher regulatory requirements. The main reason for the uncertainty is the fact that UK firms face two definitions of financial advice.
The consultation suggests changing the definition in the Regulated Activities Order (RAO) to help remove uncertainty and more closely align with the other definition of financial advice. It is hoped that this change would help improve the provision of financial advice to consumers. The consultation is open for comment until 15 November 2016.