The Financial Conduct Authority (FCA) is consulting on how to make it easier for firms to give more simplified forms of individualised financial advice to consumers, which the regulator says could mean more people accessing advice.
Simplified forms of advice can help consumers with more straightforward needs and do not require a full assessment of all their financial circumstances, the FCA explained, making it more accessible and affordable.
Sarah Pritchard, deputy chief executive of the FCA, said: “For too long the support people need to make important financial decisions has been out of reach for many.
“A market that provides good quality, lower cost simplified advice alongside comprehensive financial advice and targeted support will better support people making decisions about their financial lives. We want to see more people getting supported, who aren’t currently, and a market that innovates and offers tailored services to meet differing consumer needs.”
Firms are already able to provide more simplified forms of advice but, according to the FCA, not many offer it. To encourage innovation and open access, the regulator is proposing to make small changes while maintaining appropriate consumer protections, which it believes can revitalise the sector.
Changes include simplifying and consolidating the suitability framework into one set of common rules and expectations, clarifying existing flexibilities in suitability rules with an expectation that advisers consider ‘sufficient’ information, rebalancing the role and purpose of suitability communications to support firms making them concise, consumer-focused and proportionate, and giving firms greater flexibility in how they design and deliver ongoing advice services.
Qualification standards for advisers will remain unchanged and the FCA is not proposing to change the adviser charging rules. Advice will still need to be paid via agreed-upon adviser charges rather than provider-paid commission or through cross-subsidisation.
Steve Gazard, chief distribution officer at Quilter, says the consultation is an important step towards fixing a long-standing gap in the system. “Rather than creating a new simplified advice regime, the FCA is consolidating and streamlining the existing rulebook so firms can make better use of the flexibility already available,” he explained.
“Reframing suitability around sufficient information and proportionality, and bringing the rules together into a single area, should help firms deliver simplified forms of advice where a customer’s needs are clear without running a full holistic process each time.
“It is also helpful that the FCA is clarifying that advisers do not always need to justify the client’s level of knowledge‑and‑experience for mainstream recommendations, such as straightforward ISA or pension journeys, and that suitability reports should be concise, client‑facing documents rather than defensive compliance exercises.”
Gazard added: “Importantly, the FCA has chosen not to relax adviser‑charging rules or qualification requirements. That is the right approach. Consumers should expect that any personal recommendation, however focused, is delivered by a properly qualified adviser and paid for transparently. The opportunity here is not to cheapen advice but to use existing standards more intelligently so more people can access the right sort of help at the right time.”
“Other than updating our perimeter guidance, this is the final piece in the FCA’s policy work to make sure that the advice market works for the millions who depend on it for their financial futures,” the organisation said.
Pritchard concluded: “We welcome everyone’s views on whether our proposals will achieve our aim of building firms’ confidence to offer a wider range of advice and ultimately to help consumers navigate their financial lives.”
