The FCA’s inclination to “restrict and ban” what it does not like is not helping consumers get good outcomes and needs to be challenged.
Royal London director of policy Steve Webb made the point in a keynote speech at The Investing and Saving Alliance’s annual conference in London.
He said there is an urgent need to start a conversation about the relationship between guidance and advice.
Webb suggested there is little evidence financial education works and “timely interventions” are what drive better consumer outcomes.
He said there is a need to “soften the boundary between guidance and advice” and have “multiple channels” of delivery.
“Am I for government sponsored financial advisers? I am for government enabling consumers to purchase affordable advice, yes. A 30-minute government subsidised voucher with local financial adviser could work. We need to get people through the door and reduce regulatory costs,” he added.
The FCA has acknowledged the regulatory perimeter between providing guidance services and regulated advice is not clear to all stakeholders.
Stakeholders pointed this out to the watchdog in their responses to the FCA’s call for input on evaluation of the Retail Distribution Review and Financial Advice Market Review.
The FCA plans to publish an update on the progress of the post-implementation reviews of FAMR and RDR in early 2020 and a final report in autumn in 2020.
It also pointed out to Money Marketing on background the FCA does not set the definition of regulated advice.
This is in the final FAMR report published in March 2016 that says the definition of regulated advice in the existing Regulated Activities Order is based upon a personal recommendation, in line with the EU definition set out in Mifid.
Another former frontline politician to speak at the conference was Baroness Ros Altmann who drew attention to rising debt levels across the economy.
In October the Institute for Fiscal Studies warned a no-deal Brexit could push the UK’s debt to its highest since the mid-1960s.
Altmann said: “Debt is higher now than 2008 as financial resources and resilience are weakening across the economy. There is not much control of retail credit and people are getting unsolicited invitations for credit.
“Part of debt epidemic is acceptance of it. Debt is bringing forward growth from the future to today. We might have some economic crisis related do debt down the line and there will have to be some form of debt forgiveness.”
She added the massive injection of cheap money into the world economy by central banks through quantitative easing since the financial crisis has played an important part in the explosion of debt.