In August 2015, I made the mistake of checking my work emails late one Sunday evening. Instead of turning in for the night, I poured myself a fresh cup of coffee and turned my laptop on. The reason was an embargoed press release from the FCA announcing it was about to undertake a wholesale assessment of the advice sector.
The Financial Advice Market Review was already being badged as ‘RDR Mark Two’ come Monday morning. More accurately, it seemed intent on addressing the unintended consequences of the RDR; that increasing the qualifications threshold and turning off revenue streams from commission had priced consumers out of the market.
The goal of FAMR was stated as to explore ways “government, industry and regulators can take individual and collective steps to stimulate the development of a market to deliver affordable and accessible financial advice and guidance to everyone”.
This time two years ago, a final report was released containing 28 recommendations for reforming the advice market. That’s a lot of recommendations – too many, arguably, to focus on any one of them.
In April 2017, this was followed up with another progress report. There have indeed been significant strides forwards since FAMR. From tightening up the boundary between advice and guidance to guiding the Financial Services Compensation Scheme funding review, encouraging employers to facilitate advice and setting up a dedicated unit for automated services, the FCA, Treasury and industry have been diligently working their way through that lengthy list of reforms.
Twenty-four months may be a short time in advice, but the market seems disappointed at the lack of progress in closing the so-called advice gap as we reach FAMR’s two-year anniversary.
Yet, the reality remains that not everyone needs advice. In fact, most people don’t. Once you realise this, the size of the supposed advice gap reduces accordingly.
The FCA and Treasury know this all too well. Scratch the surface and you see that the aim was only really to expand advice to those who should receive it. Ensuring consumers get the financial help they require by making sure there are no barriers to giving guidance or information to those who do not need fully regulated advice has taken centre stage in officials’ thinking.
Just look at the priority this was given in the final FAMR report. The very first recommendation was to amend the definition of advice. The second was on how to regulate guidance. Re-reading the mission statement, FAMR wanted to deliver “financial advice and guidance” to all, not just advice.
The government and FCA keep saying they don’t want providers to be hamstrung when they want to give some sort of financial assistance. FAMR’s chief success has been in reassuring them they will not bear regulatory responsibility for advice should they decide to give only a helpful steer on potential options.
More consumers will get financial help thanks to FAMR, that much is for sure. It just might not be from your traditional IFA this time.