APFA’s director general, Chris Hannant, welcomed today’s announcement from the Financial Conduct Authority, arguing that there needs to be a “fundamental rethink” of the current regulatory environment, particularly around liability.
“Most barriers to a thriving and varied advice sector come from unfair rules surrounding liability,” he said, adding that there is currently a lack of a ‘long-stop’ for advisers, which means they are legally responsible for any advice they give to clients for the rest of their life.
Hannant also pointed to “systematic problems” with the Financial Ombudsman Service’s decision-making, and argued that the levy for the Financial Services Compensation Scheme imposes an “unpredictable and seemingly ever-increasing fee burden”.
In light of this, he said APFA was “particularly pleased” that the interaction between the FOS, the FSCS and financial advisers was now in redress.
“Consumers need to understand that investments can never be 100% risk-free,” he added.
Advice at a 25-year low
Other industry figures, including the chief executive of the Investment Association Daniel Godfrey and head of advisory services at FundsNetwork Jon Everill, have argued that the review will tackle the ‘advice gap’.
“With adviser numbers at a 25-year low but demand for advice, primarily due to the pension freedoms, on the rise, the advice gap is only likely to widen due to a lack of availability and accessibility,” said Everill.
“It’s therefore very encouraging to see that the Treasury has launched the Financial Advice Market Review to tackle this issue.”
The Treasury also announced today that the government was planning to consult later in the year on how the provision of free and impartial financial guidance, including the Money Advice Service and Pension Wise, can be made more effective.