The Financial Conduct Authority (FCA) has begun focus groups with members of the financial services industry examining ‘practical difficulties’ in the boundary between advice and guidance.
The regulator also confirmed that its review of the boundary between regulated financial advice and guidance does change anything for the protection and health insurance sector yet.
Sarah Pritchard, executive director for markets at the FCA, (pictured) added that the regulator was aware of concerns about how the boundary operated and wanted to clarify it for consumers.
Pritchard was fielding a question from Health & Protection at the FCA’s annual public meeting on what the review will mean for organisations operating in the sector.
Pritchard revealed the FCA was reviewing the boundary between regulated financial advice and guidance across financial services last month.
“It’s important to say there are no changes. We continue with the rules and the legislation that remain in place,” Pritchard told the audience.
“But what we have signalled is a desire to have a look at how that boundary is working in practice.
“We know we’ve heard over many years that the boundary does not work well but equally, we know that the boundary is there to protect consumers and that it is really important that consumers have access to good quality advice – particularly when they’re making decisions around investing, particularly in the pensions context.”
Elaborating on the review, Pritchard revealed the regulator was seeking to do more to understand the practical examples where the boundary was not working.
“And what you’ve heard us say is that we have already got underway some groups of industry stakeholders to explore practical difficulties,” she continued.
“And the aim of doing that now is so that when the future regulatory framework is passed into legislation, and there is a greater ability to then consider the potential for further change, that we have taken forward some initial work to inform those broader discussions at that time.
“In the meantime, you may have seen us introduce guided choice architecture for consumers going through their pensions journey – investment pathways introduced to help guide consumers when they decide to draw down their pension options in terms of drawdown.
“And you have also seen us confirm in our consumer investment strategy that published last year that we want to explore a simplified advice regime for mainstream stocks and shares ISAs where the risks to consumers are relatively low.”
Speaking at a press onference after the annual event, Pritchard cconfirmed the regulator was working with the Association of British Insurers (ABI) and The Investing and Saving Alliance (TISA).
But Pritchard added that the regulator also thinks it is important the weight of regulation should be commensurate with the level of risk.
“But equally, moving away from a one size fits all approach will be complicated and it will need assistance from both industry and consumer groups too,” she concluded.