In its FAMR Baseline Report, the City watchdog and HM Treasury said it would judge progress based on three central themes; including access such as consumer engagement, affordability and the quality of advice and guidance.
This means the Financial Conduct Authority (FCA) will step up its long-running scrutiny of financial advisers, which in recent weeks has seen the regulator issue new rules on how to advise clients looking to transfer their pension pots out of defined benefit schemes.
As a result of the new guideline, advisers can expect their charges to come under the spotlight as well as the extent to which firms are offering different types of services such as automated advice.
Advice study
FAMR was launched jointly 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.
The subsequent report published in March 2016 made a number of recommendations aimed at making it easier for clients to access affordable financial advice.
These included measures designed to tackle barriers to consumers accessing and engaging with financial advice, such as saving into a pension, taking income in retirement and investing.
Another recommendation, which has now been published, was that the FCA and HM Treasury should come up with a number of benchmarks to measure the success of reforms to the industry.
FAMR Benchmarks
To measure success, the FCA said it will take a more detailed look at themes including:
- Good availability of affordable, high quality advice and guidance, which consumers at all stages of their lives are able to access to help them with their particular needs.
- Greater innovation in the interests of consumers, encouraged by a flexible and well understood regulatory framework for advice.
- A range of channels through which consumers are able to access advice and guidance, including in the workplace, and appropriate flexibility in the way consumers are able to pay for advice.
- Consumers are engaged with their own financial affairs and so seeking out the advice and guidance they need.
The regulator will also keep track of both demand and supply side indicators in the industry by compiling data on the numbers of consumers using advice and guidance and the different channels used, the use of workplace advice and guidance and reported reasons for not taking advice
The regulator will also keep tally of whether consumers are willing to pay for advice, consumer levels of engagement and levels of satisfaction with advice and complaints data.
Supply side issues include the number of advice firms and advisers, the number of independent/restricted firms and minimum investment/pension pot size advised on.
Advice vs guidance
Earlier this year, UK advisers were told they will need to make clear to clients the difference between “advice” and “guidance” as part of another measure recommended by the FAMR report.
