The Financial Conduct Authority (FCA) has so far failed to give a clear indication on the scope of the advice/guidance boundary review since it announced its plans in September 2022.
But during a speech at The Investing and Saving Alliance (TISA) Financial Advice and Guidance conference, Therese Chambers, director of consumer investments at the FCA, offered an insight to what will be assessed during the joint review by the FCA and the Treasury.
In September 2022, the watchdog said the holistic review of the advice/guidance boundary will help the FCA “understand how to reduce the regulatory burden while continuing to provide the right level of consumer protection”.
Chambers said on 21 March 2023: “I can today confirm that accumulation products, including general investment accounts, Isas and Pensions wrappers, will be within the scope of this review.
“We have also taken on board the issues that firms operating in the pensions decumulation space have raised on providing proportionate guidance to consumers. And I can announce that we will also be including decumulating assets, including pensions decumulation, within the scope of the review.
“However, recognising our regulatory standpoint that a firm should start by assuming that a transfer out of a pension scheme with safeguarded benefits will not be suitable; I can confirm that defined benefit transfer advice, even below the £30,000 ($36,674, €34,033) threshold for advice, will be excluded from this review.
“Additionally, any other pensions that have safeguarded benefits such as guaranteed minimum pension or a guaranteed annuity rate will also be excluded from the scope of this review. Having an effective framework that has the trust and confidence of consumers, that can work for everyone, will be in everyone’s interest.”
Chambers also said that it is “imperative” that the FCA gets the advice-guidance boundary review right, so the assessment will “take time”.
‘Great deal of promise’
Chris Hill, chief executive of Hargreaves Lansdown, said: “Early details of the advice/guidance review offer a great deal of promise. We’re delighted to see it will be a joint enterprise between the FCA and the Treasury, which demonstrates real ambition in the scope of the review. It’s also excellent news that it will start with a blank sheet of paper and look at designing the best possible approach from the ground up.
“The review will undertake in-depth engagement with firms, which is absolutely vital to ensure the final proposals enable organisations to support their clients in the best possible way, using their data and expertise to drive better client outcomes.
“Changes to the advice guidance boundary will allow greater personalisation of consumer communications, which in turn will increase engagement and drive better decision making and outcomes.
“It’s also pleasing that the FCA recognises how crucial digital technology is to this process: how it has transformed financial services, and how it has the potential to radically improve the support provided to consumers.
“We will have to wait for more detail of the timetable for the work, but the breadth and depth outlined today are hugely positive. We look forward to engaging with this process, and working to bring a step change in people’s finances.”