The Financial Conduct Authority (FCA) has published a call for input in relation to investment advice as part of its evaluation of its Retail Distribution Review (RDR) and Financial Advice Market Review (FAMR). This call for input follows the FCA’s promise to carry out this evaluation in its 2018/2019 business plan. Responses to the call for input must be submitted by 3 June 2019.
Advisers have been kept firmly in the spotlight by the UK regulator over the last decade. Since 2006, providers of investment advice have been subjected to changes resulting from the RDR and the FAMR and, furthermore, impacted along with the broader sector in respect of the UK’s implementation of MiFID, the PRIIPS Regulation and the IDD. Alongside the implementation of these new rules affecting advisers, the FCA has expressly focussed on the advice market in its ongoing regulatory agenda - for example in the investment platforms market study and the assessing suitability review.
In line with this evident and ongoing scrutiny, the FCA is now evaluating the impact of the RDR and FAMR, in particular to ensure that the regulatory rules around the provision of advice keep pace with consumer needs and developments in the market. The call for input asks for responses from both firms and consumers to inform its understanding of the following key areas:
- access and affordability, which were focus areas for the FAMR;
- consumer needs both now and in the future, and how these needs should be met;
- market trends including future expected trends, and how these changes may needs to interact with the regulatory regime; and
- how effective regulation of the area is best achieved including in relation to barriers to competition.
As part of the evaluation the FCA may revisit its current stated outcomes and indicators of success, two sets of which were developed respectively out of the RDR and FAMR.
So far, the key FCA work following on from the two main reviews has been the post-implementation review of the RDR and an interim consumer research piece in relation to the FAMR. This work drew broadly positive conclusions but also noted that more time would be needed to establish how successful the implementation of RDR and FAMR changes had been.
This evaluation and call for input seems a natural progression for the FCA, particularly in light of the focus on consumer needs and value for money which is a point of concern raised by the FCA in other regulatory areas. It will be interesting to see the feedback received following this call for input, especially in relation to future market trends and risk and accordingly how the FCA may propose to future-proof its regulatory approach going forward.
The market is dynamic and has evolved considerably since the initiatives were introduced. We will, therefore, assess the market to consider whether it is meeting consumer needs now and will do so in future.