HM Treasury and the Financial Conduct Authority’s policy paper DP23/5 on the Advice Guidance Boundary Review – proposals for closing the advice gap - Which? response

Summary:

• Which? supports the HM Treasury and Financial Conduct Authority (FCA) proposal to further clarify the advice/guidance boundary. The impact of such an approach should not be underestimated, especially when the Consumer Duty has only very recently raised the bar of what is expected of firms when supporting customers. This has presented new questions for the FCA and firms about the advice/guidance boundary which have not yet fully been addressed.
• We strongly oppose the targeted support proposal. Insufficient evidence has been presented for the harms that this would seek to address to warrant such a seismic shift. The proposal would allow firms to direct their customers towards certain courses of action without any requirements to ensure it is suitable for them. Consumers would therefore have limited rights to redress if they suffer harm.
• We are not convinced that a new category of ‘simplified advice’ is required. We can understand how the requirements for regulated advice could potentially be tailored in some limited circumstances where consumer needs are simpler and easier to define. However, given past attempts at such reform have not been successful at closing the ‘advice gap', it is unclear why such a change is required. Further work is also needed to understand why some firms are already able to offer one-off investment advice solutions at very low cost under the existing advice regime.