Caroline Connellan, head of UK premier and wealth at HSBC Retail Banking and Wealth Management said she welcomed the “no return to commission from product providers”.
“The increased transparency introduced by the Retail Distribution Review (RDR) will be maintained. Having a transparent and professional market place is the right thing for our customers”, she said. Connellan added that HSBC recently launched a simpler protection advice service and was testing a similar offering for investment advice.
Tobin Ashby, legal director in the insurance team at Pinsent Masons, also picked out the Financial Advice Market Review (FAMR) stance on commissions.
“The report provides a clear steer towards converging regulated advice in the UK with the ‘personal recommendation’ concept used in EU laws. This is a logical step that could go a long way to providing the clarity for firms that the report acknowledges is currently missing.”
He said this was to be combined with proposed Financial Conduct Authority consultations for further guidance on streamlined advice and the suggestion of nudges and ‘rules of thumb’ for guidance.
“In acknowledging what has arguably been a key success of the Retail Distribution Review the report has however, in a significant single paragraph, ruled out a return to commission-based financial advice”, he said.
Ashby added that the Treasury and the FCA, working with the new Financial Advice Working Group, “have an important 12 months ahead before they must formally report back to the Economic Secretary and FCA Board on progress”.
High-cost FSCS levy
Elsewhere, Old Mutual Wealth chief distribution officer Richard Freeman said the findings had identified some important issues for reform.
“High-cost and unpredictability in the FSCS levy has become a burden on adviser firms, prohibiting small business owners from investing for the future. The FCA and Treasury have today recognised these concerns and we believe that a more proportionate FSCS levy on advisers will help create economic conditions that allow firms to grow.”
Freeman added it was also pleasing to see a firm commitment to clarifying the boundaries of advice and guidance, but that allowing access to part of the pension pot for advice was a bold proposal that would require careful legislation.
“Perhaps the most important thing though is the overall positive tone regarding the future of the advice industry. The merits of regulated advice are not always clear to the wider public and encouraging a positive rhetoric around the benefits of financial planning is really important.
“It is really pleasing to see the FCA and Treasury speaking positively about advice and encouraging government to look at ways to nudge people to seek financial advice.”
The FAMR report was published earlier today.