The Financial Advice Market Review (FAMR) produced in March 2016 aims to remedy this, with August’s CP17/28 providing an update on the progress.
From 3rd January 2018 new legislation will take effect, stating advice must take the form of a personal recommendation.
Regulated advice currently consists of 2 elements for the purpose of Article 53(1) of the Regulatory Activities Order (RAO):
CP17/28 refers to the latter as guidance. Guidance in this instance is not referring to the provision of factual or generic information as this already sits outside the definition of regulated advice. Rather guidance is taken to mean supporting consumers making financial decisions but stopping short of making a personal recommendation. It is proposed that the same rules should apply to firms providing guidance as apply to other firms providing non-regulated advice. Such as:
Chapter 4 of CP17/28, sets out the FCA’s guidance on whether a service is a personal recommendation. Annex 1G of CP17/28 provides a list of examples to help advisers with this. In addition it directs advisers to FG15/1 which lists the 5 tests to determine whether a service is a personal recommendation.
What is clear from CP17/28 is the FCA’s ambition to increase consumer access to guidance, and to help advisers identify what constitutes a personal recommendation. Helping advisers understand what can be provided via guidance without being considered a personal recommendation and the additional regulatory burden this carries may go some way to solving this issue.
We will investigate the issues raised in relation to the advice unit and Insistent clients in an upcoming article.
Senior Business Development Manager
Justin Corliss is a Business Development Manager with Royal London. Justin started his working life in his native Australia where he worked for the Commonwealth Bank of Australia in client facing mortgage roles. Since moving to Scotland in 2002 he has held positions as a broker consultant for both Scottish Widows and Scottish Life dealing predominately with pensions. Before assuming his current role he worked as an Employee Benefits Consultant with a private firm. Justin holds the Chartered Institute of Insurance Advanced Diploma in Financial Services including AF3.