The Financial Conduct Authority (FCA) issued a call for input in May as part of the evaluation of its Retail Distribution Review (RDR) and Financial Advice Market Review (FAMR). On 22 July the FCA published an update on its progress now that it has received responses from industry stakeholders. While the update does not set out any indication of the FCA's plans aside from continuing with their review, it does set out a summary of the main themes which have emerged from the responses so far.
The FCA had already identified key areas of focus including access and affordability, consumer needs, market trends and achieving effective regulation. This update adds to these key areas by highlighting the following themes:
- lack of consumer access to appropriate services, particularly in relation to consumers with smaller amounts of money to invest;
- lack of clarity on the point where helpful guidance becomes investment advice;
- need for better education of consumers to encourage engagement with guidance and investment advice services; and
- conflicting views on innovative ways of providing advice, with some respondents saying that online services are still less popular, and others saying that they are becoming more useful but technological and streamlining improvements are needed.
In terms of next steps, the FCA will conduct a further information-gathering exercise involving a survey of a selected sample of firms and a review of data gathered through the Financial Lives survey. The FCA also welcomes further information that industry participants would like to have taken into account as the next stage of the review is progressed (which can be emailed in). The final report is expected to be published in 2020.
There has been a sustained regulatory focus on the provision of investment advice over the last decade which, as evidenced by the call for input and ongoing regulatory scrutiny of this area, is not showing any sign of abating. We look forward to the report from the FCA and hope that it provides clear and practical feedback for the various firms working in the retail financial services space. In the meantime, this update re-states the FCA's emphasis on consumer engagement and access, and the use of technology in the regulatory sphere.
Some firms [are] feeling unable to provide potentially useful information to consumers if they feel there is a risk that it will be perceived as regulated advice.