The FCA proposed to relax independent advice rules to make it cheaper and easier for firms to advise consumers about certain mainstream investments within stocks and shares Isas.
In a consultation paper at the time, the FCA said it would create a separate, simplified financial advice regime to improve people’s access to financial advice.
As part of the regime, the FCA said it would create a new handbook definition of core investment advice.
It proposed the overall definition comprises: advice may only be given on investments into a new stocks and shares Isa, advice may only relate to investments up to the value of the annual Isa subscription limit set by the Treasury; and advice may only be given on a sub‑set of investment products held within a S&S Isa.
The FCA said it would limit the regime to advice relating to investments held within a S&S Isa wrapper in order to keep the tax implications as simple as possible for investors.
September 2022
Industry members welcomed the regulator’s review of the advice-guidance boundaries and urged for it to “push forward at pace”.
In a speech by the FCA’s executive director Sarah Pritchard last September, she said the regulator will make sure that it does what is best for the UK, retaining market integrity and protecting consumers.
“One area we are looking at transforming is the advice and guidance rules,” she said.
“Mifid was introduced 15 years ago and had a clear distinction between advice and guidance.
“Offering advice on what to invest in carries with it a heavy regulatory burden. A full suitability assessment – in effect an in-depth MOT of a customer’s personal financial situation - is needed from a qualified financial adviser.”
January 2023
The FCA's director of consumer investments acknowledged that the simplified advice regime is likely to be of more interest to larger financial services firms, but she encouraged smaller advice firms to consider it.
Speaking at an FTAdviser event to mark a decade of RDR , Therese Chambers said it would "certainly" be easier for firms which operate at a bigger scale to enter the simplified advice market because it would require investment.
But she said: "Does that mean that it is only open to large firms or platforms or banks? Certainly not. All firms need to be considering the future sustainability of their business, including where their next generation of clients will come from and where their next generation of staff will come from."
Chambers said the increase in trading during the pandemic showed there was a large number of young people who were interested in investing but for whom the "traditional routes" to doing so were "not working".
March 2023
The FCA's review of the advice and guidance boundary was expected to cover both accumulation and decumulation products but will exclude defined benefit transfers.
Speaking at The Investing and Savings Alliance’s Financial Advice and Guidance Conference in London in March, Therese Chambers, director of consumer investments at the FCA said the regulator has been actively considering the scope and approach of the review since the start of the year.
Chambers said both the FCA and Treasury recognise the significance of this work and are keen to ensure that the review is genuinely holistic.
“We will be considering the review from the starting point of a ‘blank canvas’” she said.
“This review should work for the group that these products and services are intended for: consumers.”
August 2023
The FCA paused plans to create a simplified advice regime after limited support from the industry and has instead rolled it into a wider review of the boundary between advice and guidance.
In an update in August, the FCA said it will not go ahead with the core investment advice regime, which aimed to allow firms to provide consumers with straightforward financial needs access to simplified advice.
The regulator said it will now instead incorporate its work into its review of the advice/guidance boundary.
The FCA said: “Given the potential for more significant change that is now possible through the advice guidance boundary review, and given the limited support from industry for the initial set of proposals consulted on, we have decided to roll the development of these proposals, taking onboard the feedback we received, into the broader review.
“This will allow us to support the more substantial changes that are being asked for and considered through the review.”
The simplified advice regime proposed relaxing advice rules so that firms could offer simplified advice for clients with up to £10,000 in cash savings.
The regime was limited to advice relating to investments held within a S&S Isa wrapper in order to keep the tax implications as simple as possible for investors.
Around the same time, the FCA published guidance to help firms provide consumers with greater levels of support, including getting closer to the advice guidance boundary.
The FCA urged firms to provide greater levels of support for consumers making investment decisions.
“We, therefore, remind firms of how the advice boundary currently operates,” the regulator said.
“By building greater confidence among firms to operate closer to the relevant boundary, we hope to improve access to investment guidance and advice for consumers.”
The FCA highlighted different ways authorised firms can support consumers under the existing regulatory framework.
The regulator said it wants to see more consumers invest with confidence, understanding the risks they are taking and what regulatory protections apply.
“We want consumers to be able to get advice or support when making their investment decisions,” it said.
September 2023
At Pimfa’s Compliance Conference, the FCA said it is going to “take its time” when it comes to the advice-guidance boundary review.
Lucy Castledine, director of consumer investments said the advice-guidance boundary review is a substantial piece of work and stakeholders have told the regulator to take its time to get it right.
“It has the potential to lead to wholesale restructuring of the regulatory framework for advice and guidance,” she said.
“We have been told to take our time. This is difficult. We need to make sure we get this in the right place.
“We have tried before, and we’ve made advancements, but this is really a fundamental opportunity for us against the backdrop of European legislation falling away to make a real difference.”
This came as earlier that week, the online safety bill passed its final parliamentary debate and is now ready to become law.
Castledine said the advice-guidance review would seek to ensure that consumers “get the help they want, at the time they need it and at a cost that is affordable to them”.
