In Sarah Pritchard (Executive Director, Markets)'s speech at City and Financial Global's 'The Future of UK Financial Services Regulation' Summit on 27th September, the FCA have outlined that it is looking at transforming the advice and guidance rules.
Acknowledging that mass market consumers are failing to access advice (due, Sarah says, to the heavy regulatory burden and high costs involved in providing advice) the FCA remain committed (as outlined in its Consumer Investments Strategy) to establishing a simplified advice regime for mainstream stocks and shares ISAs where the risks to consumers are relatively low.
The FCA hopes this will remove some of the burden of regulation which currently applies across the board to all advisers. It will also enable firms to reduce their charges and make advice on mainstream investments more accessible to mass-market consumers.
Once the FCA has greater rule making powers under the future regulatory framework legislation next year, it plans to do more. To get ready for that, it wants to carry out a holistic review of the boundary between advice and guidance so it can understand how to reduce the regulatory burden while continuing to provide the right level of consumer protection.
The FCA's view is that the weight of regulation should be commensurate with the level of risk, but envisages that moving away from the one-size-fits-all approach mandated by MiFID will be complex and it will need assistance and input from industry.
For those of us in industry who recall the FSA's and FCA's 'Basic Advice', 'Primary Advice', 'Simplified Advice' and 'Streamlined Advice' proposals over the last 15 or so years, will eagerly await FCA proposals in this area.