The Treasury and Financial Conduct Authority (FCA) review aims to examine the advice gap, barriers to growth in the market, inhibitors to consumer demand for advice and the role of technology in advice.
It represents an opportunity for the industry to work collaboratively with government and the financial regulator to improve consumer access to the benefits of financial advice.
Together, Old Mutual Wealth and Intrinsic are engaging with the review process in order to champion the value of regulated advice, and support the views and interests of the advised sector and its customers.
Old Mutual Wealth is calling for:
- A change to the regulator’s statutory objectives
A number of factors mean there is a high compliance and regulatory burden on the sector. Some of these issues can be overcome without detriment to the customer.
In order to embed support for advice in the regulatory process, the Financial Conduct Authority should assume a renewed focus on backing and promoting financial advice. This is best achieved through a change to the regulator’s statutory objectives to include an aim of supporting financial advice, alongside the existing objectives.
- A foundation tier of regulated advice
The descriptions and labels currently attached to advice are unhelpful and should be reviewed. Government and the regulator should also consider whether it can work with the industry to develop a new tier of regulated ‘foundation’ face to face financial advice, which could help to close the advice gap for those with limited wealth.
- Measures to address consumer attitudes towards advice
Consumer attitudes to advice are mixed and many are unaware of what a financial planning service encompasses and why it may be of value. Encouraging healthy demand for financial advice will require government-led investment in education and awareness. Initiatives of this nature have been successful in bringing about behavioural change in the public interest before and we see a role for government in co-ordinating this activity.
- Reform of consumer redress and complaints procedures
Consumer access to redress and independent adjudication of complaints is extremely important. However, there are inconsistencies and anomalies in the current system which can be addressed to the benefit of consumers and the industry.
Redress and compensation procedures and the associated levies should be reviewed and rationalised to ensure fairness and consistency. We believe that consumers are best protected if they stick to taking advice from regulated advisers offering regulated products. To this end we recommend that product types covered by FOS and FSCS should be limited to Regulated product types covered by FCA – clearly identified by ‘kite marks’ in Illustrations and product literature.
Old Mutual Wealth and Intrinsic have utilised their joint expertise and experience in the market and consulted with financial advisers to prepare an evidence backed case in support of these recommendations.
Both businesses look forward to working with the Treasury and Financial Conduct Authority to ensure the Financial Advice Market Review produces a positive outcome for both consumers and the industry.
Richard Freeman, chief distribution officer at Old Mutual Wealth, says:
“It is fantastic that government are working collaboratively with the industry to find practical solutions to the advice gap.
“Financial advice promotes prosperity and financial security among customers and the wider public and we want to play our part in ensuring that everyone has access to the right support and advice to manage their personal finances properly.
“In order to achieve that, advisers must be empowered to grow and develop their businesses. There are a number of hurdles that stand in the way, particularly the compliance demands and associated costs with which many small businesses struggle.
“We want to encourage the government to work with the industry to find ways to manage the regulatory burden on the sector, to the benefit of both customers and professional financial advisers.
“In today’s market it is extremely challenging to provide advice to those with limited wealth. We hope the review process will lead to the growth and development of business environment that allows firms to provide high quality advice at a reasonable cost within a workable commercial framework.”
Notes to editors
Old Mutual Wealth is one of the leading wealth management business in the UK and internationally.
It has an adviser and customer offering spanning:
- Financial advice via the Intrinsic network
- Platform based wealth management products and services via Old Mutual Wealth in the UK and Old Mutual International globally
- Asset management solutions via Old Mutual Global Investors
- Discretionary investment management via Quilter Cheviot
Old Mutual Wealth oversees £98.7bn in customer investments (as at 30 September 2015).
Old Mutual Wealth is part of Old Mutual plc, a FTSE 100 group that provides life assurance, asset management, banking and general insurance. Old Mutual is trusted by more than 16 million customers across the world and has a total of £319.4bn assets under management (as at 30 September 2015)
Intrinsic is part of Old Mutual Wealth. It is a network of over 3,000 qualified financial planners, supplying regulated advice on pension, investment, mortgages and protection.
The network supports both independent and restricted financial advisers across the UK and has offices in London, Swindon and Newcastle.