The Financial Conduct Authority, usually known as the FCA, are aiming for a hard and fast overhaul of the financial sector, including significant changes to the various regulatory burdens on firms.
Why Make Changes?
There is considerable government pressure to make the changes. In part this is because change is overdue: with the current rules around financial advice written more than ten years ago, they may not be as effective for today’s world. In recent years, firms have needed to set aside hundreds of millions of pounds to pay back customers last year who had not received the ongoing services they had paid for, with the hardest hit firm, St James Place, having to set aside £426 million following a deluge of client complaints.
Greater clarity is, therefore, needed. If you are uncertain about current or new regulations and how they apply to your firm, it is worth investing in the services of FCA compliance consultants such as https://www.adempi.co.uk.
Changes Coming
Nick Hulme, the FCA’s head of advisers, wealth and pensions, has spoken on the changes, addressing the accusation that the FCA had been behaving as a price regulator with the consumer duty regime. The regulator, which forced financial firms to put their customers’ needs first, has been accused of failing to improve outcomes for investors. With the Business Secretary, Jonathan Reynolds, stating in January that cutting consumer duty was a key target of the government’s deregulation plan, Hulme has responded that the regulator is simply looking for reasonableness on how clients are charged.
Another regulation that is going to be overhauled by the FCA is around financial advice and guidance. This will allow firms to offer targeted guidance without subscribing to the full rules around formal financial advice.
This is being done to increase the number of people taking financial advice each year from around 8% to 92%. Hulme compares it to creating steps towards full advice.
In June, the regulator is expected to publish a consultation on targeted support for both retail investments and pensions. This will include updates on the advice guidance boundary.