Financial advice firms have welcomed the FCA’s proposal to remove the annual review requirement for advisers providing ongoing pensions and investment services.
Several advice firms have welcomed the consultation paper, saying that it provides much needed clarification of the rules around ongoing advice.
James Heal, director of public policy at St James’s Place, said: “The FCA’s consultation is a welcome step in clarifying the requirements around ongoing advice services, especially the recognition that consumers need different things from ongoing advice enabling some flexibility in offering.
“We are also pleased that the FCA recognises the need for firms to be able to design commercially viable simplified advice. On this latter point, we believe a lot of work will be needed if the objective is to genuinely widen access to advice, close the advice gap, and encourage more people to invest for the long term.”
PIMFA, the trade association for UK wealth managers and financial advisers, said that by giving firms the choice on when to deliver reviews could help advisers be more innovative when it comes to helping close the Advice Gap.
Simon Harrington, head of public affairs at PIMFA, said: “Giving firms the 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.
“While this represents meaningful progress, it is too early for us to judge how firms will respond to the proposals for Simplified Advice will be greeted as warmly. We continue to take the view that it will only be attractive to firms who can offer it in a way that is commercially viable - this means looking at adviser qualifications.”
The consultation paper detailed plans to moving from requirements to offer annual to periodic suitability reviews and clarifying that firms can charge fees for both personal recommendations and related services on an ongoing basis.
The regulator added that advisers have told it that firms struggle to design commercially viable simplified advice models due to being unable to tailor their ongoing services to reflect customer needs due to current regulatory requirements for annual reviews.
Under new rules the adviser would be able to determine how often they carry out reviews with clients, based on an assessment of customer needs and in keeping with Consumer Duty.