Financial Regulatory Authority Vows to Intensify and Accelerate Transformative Efforts in the Financial Sector
Revamped Chatter:
Financial Conduct Authority (FCA) is gearing up to give the financial sector a facelift, with a focus on overhauling rules around ongoing advice and streamlining the divide between advice and guidance. These changes are all part of the FCA's broader 2025-2030 strategy.
The strengthened rules around ongoing advice are in response to the storm faced by wealth management firms last year, with St James's Place being the hardest hit, setting aside a whopping £426m to handle a surge of client complaints. The FCA admits that the rules around ongoing advice dated back over a decade and promises to shed light on the new regime by summer.
Critics have accused the FCA of acting as a price regulator with its consumer duty regime, a regulation that urges financial firms to put their customers first and provide fair value. However, the FCA's head of advisers, wealth, and pensions, Nick Hulme, dismissed these accusations, stating that the regulator is merely seeking reasonableness in pricing.
In a more consumer-friendly move, the FCA plans to make it easier for financial firms to offer targeted guidance to investors without adhering to the strict rules of formal financial advice. The goal is to bridge the gap between the eight percent of people who currently seek financial advice annually and the remaining 92 percent by creating "stepping stones" leading to "holistic full-fat advice."
The FCA plans to publish a consultation on targeted support for pensions and investments next month, which will also tackle updates to the line between advice and guidance. This revamp aims to provide consumers with better decision-making tools, promote industry trust, and foster market growth, all while maintaining consumer protection and encouraging both innovation and stability.
The FCA is aiming to strike a balance between promoting growth and innovation and ensuring consumer protection in the industry's collective mindset towards risk. The ultimate goal is to support consumer welfare and market growth. Although specific rules are yet to be published, the FCA's 2025-2030 strategy points to this as a key focus area, accompanied by efforts to simplify supervisory communications and remove unnecessary regulatory burdens.
- The FCA's revised strategy includes simplifying the divide between advice and guidance in finance, with the aim of encouraging more people to engage in investing, such as the 92% who currently do not seek personal-finance advice annually.
- As part of its 2025-2030 strategy, the FCA plans to provide financial firms with the flexibility to offer targeted guidance for investors, offering a path towards holistic financial advice and promoting healthier financial practices within the business sector.
