This is early days but should Financial Planners take this seriously or just brush it off as another ripple in the regulatory currents, with little to concern them?
It’s worth remembering that similar reviews led to the Retail Distribution Review and the Financial Advice Market Review, both of which brought sweeping changes.
True, this review will not be published until well into next year but planners and Paraplanners should not underestimate its potential impact.
The FCA is guarded in its announcement of the review. It is not threatening wholesale change. It is not implying there is serious cause for concern. Yet.
It is still a world away from the RDR when there was a widespread acceptance that commission-based product sales could not go on and were harming consumers. They ended, at least in the investment world.
This time the FCA says only it has a number of concerns and is calling for ‘input’ from stakeholders about the way the industry works.
One interesting comment the watchdog makes is that “Consumers can struggle to assess the cost of advice and may overpay for services which they do not need.”
It also mentions potential conflicts of interest, poor treatment of consumers and misleading or confusing communications as areas it wants to dive into further.
The FCA is seeking initial feedback by 3 June and will be holding ‘stakeholder’ events around the country to get the debate under way. I would urge you to read the current FCA documents on the review and get along to the events if you can. Professional and trade bodies should also be consulted.
While there has been huge improvement in financial advice standards, largely due to the move toward professionalism, there is much that needs correcting to make the financial advice world a place where all consumers feel comfortable.
Financial advice is increasingly a pursuit for the well off and the fact that most people remain ignorant of the financial risks and challenges they face in life remains a national scandal. If the FCA can begin to tackle these issues it will have my support.
Kevin O’Donnell is editor of Financial Planning Today and a financial journalist with over 30 years of experience.