The review said that this will "ensure that consumers can access financial advice at a key milestone in their lives and feel confident in making financial decisions as they approach retirement". The report also urges the government to explore ways to improve the existing income tax and National Insurance exemption for employer-arranged pension advice.
FAMR is also calling for the government to consult on changes to legislation to narrow the definition of regulated advice so that it is based on a personal recommendation. This would create a single definition for regulated financial advice and "remove some of the barriers that exist for firms wishing to offer guidance services".
The FCA will also review how the FSCS is funded. FAMR has suggested that the review should explore alternatives to enable advisers to plan costs more effectively. The review will explore risk-based levies, reforming the FSCS funding classes, and whether contributions from firms could be smoothed by
making more extensive use of the credit facility available to the FSCS.
It also proposes a series of measures to improve the transparency of the processes and decisions of the Financial Ombudsman Service.
Due to the low number of complaints relating to advice given by independent financial advisers 15 years ago or more, FAMR has ruled out the introduction of a longstop limitation period for referring complaints to the Financial Ombudsman Service. The report said that this would "inappropriately limit protection for consumers on long-term products".
FAMR also highlighted the need for the FCA to give firms the confidence to deliver "streamlined advisory services" focusing on specific consumer needs, and support firms developing guidance services that help consumers make their own investment decisions. It also recommended that the FCA extend the work of Project Innovate and establish a unit to help firms develop their automated advice models.
Tracey McDermott, Acting Chief Executive of the FCA, said:
“This review has taken place against the backdrop of social and demographic changes which have led to an increasing need for individuals to take more responsibility for their own financial future. But we know that people often find it difficult to engage with financial matters and we need to make it easier for them to do so.
“The package of reforms we have laid out today will help increase both the accessibility and affordability of the advice and guidance to ensure that consumers get the help they really need when they really need it.”
Charles Roxburgh, Director General, Financial Services at HM Treasury, added:
“At a time when more and more people are seeking financial advice and guidance, we have set out how we can deliver a vibrant financial advice market that works in the interest of all consumers. Our recommendations will increase the amount of affordable, high quality financial advice that is widely available so it’s easier for people to access it at every stage of their lives.”
