The Financial Conduct Authority (FCA) is consulting on small tweaks to its pension and investment advice rules to encourage more advice firms to offer lower-cost ‘simplified advice’ propositions.
The reforms, which form part of the FCA’s ongoing Advice Guidance Boundary Review, including consolidating its existing suitability requirements into a single framework, as well as “clarifying existing flexibilities” in suitability rules to give advisers more confidence to offer simplified advice.
One of the biggest changes is that the FCA will give firms more flexibility in how often they deliver suitability reviews, removing the requirement to provide an annual review and instead offer periodic reviews tailored to clients’ needs.
The regulator is not proposing any changes to adviser charging rules, such as ongoing advice fees, but said it wants to “start a discussion about the future of trail commission” in an effort to modernise its rules and prevent potential harm. Existing qualification standards will remain the same for advisers offering simplified advice.
Simon Harrington, head of public affairs at PIMFA, said the proposals are “extremely welcome” and that giving the firms flexibility to deliver periodic assessments in line with consumer needs will “encourage firms to develop new, innovative propositions for different client needs”.
“These proposals – and the accompanying guidance – should give firms the confidence they need to continue delivering high quality financial advice on an ongoing basis,” he added.
The proposals follow the introduction of new rules allowing financial firms to offer “targeted support” from April, whereby they can suggest products to consumers based on what they would recommend to people in similar circumstances.
