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Guidance or advice?

Journalist: Carmen Reichman, FTAdviser

ended 12. January 2024

Dear advisers

I'm putting together a hub on the FCA's work around the advice-guidance boundary and I'm looking for your views!

What do you make of the new forms of advice/guidance the FCA has proposed (targeted support, simplified advice)?

Are you interested in offering targeted support or simplified advice yourself?

Do you feel it's too risky? What will need to change for you to consider it?

I'm looking for ideas on all aspects surrounding this debate so feel free to be creative!

Strictly only financial advisers, mortgage brokers, or related roles such as paraplanners please.

Respond here or email me at carmen.reichman@ft.com

Thank you!

7 responses from the Newspage community

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Michelle Lawson
Director at Lawson Financial
The key word here is simplicity. Most of the general public have no idea what the jargon is and who they are using for what and why as it is already too complex. Advice should be easily accessible for all and adding more layers could be confusing. We have to be careful to not eradicate the need for advice- it should be advice or non-advice and I don't agree with the latter. Advice should be made easily accessible for all to enable people to engage and understand what are usually the biggest financial commitments of their lives. We should be careful to not water this down in any way and keep it as a simple advice or non advisory process without any potentially ambiguous mid points.
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Mike Staton
Director at Staton Mortgages
If you ask a consumer the difference between Advice and Guidance, they won't have the foggiest, There are far too many self-proclaimed specialists giving "guidance" on social media that it is becoming impossible for the general public to tell the difference. In an era of consumer duty, full responsibility should be taken on for anybody giving "advice" or "guidance", if you aren't willing to accept the consequences for your guidance then you should just keep your opinions to yourself. When a client is sat in front of you, the situation should be bespoke to that client, in a manner that they can fully understand and comprehend, irrelevant of the unnecessary jargon that the FCA wants to throw at it, some things should just be left to the advisor who has much more hands-on experience than the bigwigs at the FCA
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Stephen Perkins
Managing Director at Yellow Brick Mortgages
There is an epidemic on social media in particular of influential users with large followings sprouting misinformation which by many viewers will be taken as advice. Often these individuals are not qualified either but the FCA takes no action. I think the line between generic guidance and advice is dangerously thin and i don’t see any of this additional guidance from the FCA changing that.
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Daniel Wiltshire
Actuary & IFA at Wiltshire Wealth
Hi Carmen

It seems this is the FCAs Big Idea for closing the advice gap. The proposals for targeted support and simplified advice essentially lower the bar for the quality of service and safeguards in place for consumers. The logic being that this will reduce the cost of providing 'advice', making those with smaller amounts to invest more commercially viable.

The trouble is, we've been here before. The large banks and insurance companies that stand to benefit from these reforms don't exactly have stellar track records as consumer champions - I fear this has mis-selling scandal written all over it.

A more sensible approach, in my opinion, would be to accept that there will always be a 'gap' where full advice is unaffordable. For lower amounts the market is already adapting to provide solutions such as robo-advice or simplified low-cost investment apps.
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Scott Taylor-Barr
Principal Adviser at Barnsdale Financial Management
Unfortunately, I think this review of the boundary is due to pressure from tech companies that want to enter the financial market but aren't prepared to take on the risk of offering actual advice to clients. The FCA has had a long-standing drive to see more tech in the sector and has bent over backward to facilitate it; the FCA Sand Box is a notable example of currently regulated firms paying to allow new entrant tech firms free access to the regulator to allow them to test and refine their products; products which could well then be taking business off the very firms that helped fund their development via the Sand Box. Past reviews of the advice sector, both in the investment and mortgage space, have concluded that clients are best serviced by full advice and recommendation, which is why we have the current regulatory regimes that we do. It seems odd that after implementing the findings of those reviews, at immense cost and time, we are now looking at reversing some of it.
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Alastair Hoyne
CEO, Finanze Capital at Finanze Capital
In the eyes of the general public, advice, guidance, or support are just semantics. When they go to a broker to take out a mortgage or loan they have a goal in mind. They rely on the broker or lender to help them by providing a suitable product. When presented with a number of options, it's down to the borrower to decide on what works best for their particular circumstances. There is room for advice, in fact, there's a need for it with so many products on offer. Keep it simple. We don't need any more layers to add to the confusion.
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Gary Bush
Financial Adviser at MortgageShop.com
With regards to the FCA's apparent wheeling back on simplified advice I think this needs serious consideration - the large corporate providers have a historic tendency to abuse any allowance for low touch point financial sales processes. We tend to like simplified processes but we still count them as within the full advice remit - it's good to attempt to streamline transactions for the benefit of the consumer and advice firm however we feel full responsibility should be taken regardless. Some financial products do lean towards a need for simplified advice due to not being complicated or featuring a low potential for risk - but the decision on which should be enforced by the regulator and not left down to providers to potentially abuse and push the boundaries too far. History has taught us that executing transactions with no advice and passing responsibility to the consumer isn't a sound and safe practice.