Following the change, authorised firms will only be able to provide advice if it is in a personal recommendation capacity, according to a Financial Conduct Authority statement on 8 December.
The announcement stems from the Financial Advice and Market Review (FAMR) that was jointly launched by the FCA and HM Treasury in August 2015 with the sole aim of identifying ways to make the UK’s financial advice market work better for consumers.
A report published in March 2016 made a number of recommendations aimed at making it easier for clients to access affordable financial advice.
Removing barriers
The change of definition was one of 28 recommendations in a bid to tackle the barriers preventing consumers from accessing advice for retail investments, protection and retirement income planning.
The FAMR Advice Unit’s new definition of advice primarily relates to automated advice services. Although elements of this guidance might be relevant for advice or discretionary investment management firms more broadly, the FCA policy statement said.
UK financial watchdog says the majority of respondents supported the proposals and there were no significant objections.
“As such we will be proceeding largely on the basis on which we consulted,” the policy statement said.
The authority says there was a strong consensus during the review that bringing the UK definition of advice in-line with the Mifid II definition would allow firms to better help customers.
Some respondents specifically commented that they found this approach to setting out guidance to be “useful” and “welcome”, the policy statement said.
Although, in a number of areas respondents asked the FCA to be more rigid or provide further guidance beyond the scope of the review.
The FCA said it intends to provide more guidance and tools for firms, such as sign-posting links to relevant existing rules and guidance and to provide further clarity and help promote effective competition.
