The government says it hopes the move will allow more people to invest and make better financial decisions by service that is a fraction of the cost of full financial advice. Some have raised concerns about what consumer protections will be in place if millions of consumers are marketed investments by firms trying to sell their own products that may not be suitable. A Treasury spokesman said the FCA will outline proposals in a policy paper later this year and that 'no decision' has been made on the changes yet:
“People ought to know how they can make their money work for them. This review aims to make it easier for people to get useful support with their financial decisions. While no decisions have been made, we and the FCA will continue to engage the sector on how best to deliver this.”
Andrew Gething of vulnerability and Consumer Duty specialists MorganAsh said:
“The big problem between advice and non-advice has been the lack of understanding of the consumer’s financial capability. It is fine for a financially astute person to undertake their own transactions, but it is not in the consumer’s interest for someone with minimal financial knowledge to self-serve.
“Vulnerability assessments now help to overcome this with the requirement to include an assessment of the consumer’s financial capability. While some firms just include this within a ‘resilience’ category, tools such as MARS can assess and record it separately. Firms who provide both advice and non-advice are already using this to triage which consumers are suitable for which approach.
“This method allows for the trigger to be different for different products and circumstances. It will be relatively easy to extend this to include which clients are suitable for guidance, advice and non-advice and to be able to monitor the success of this over time, and any resultant consumer harms. These are all important elements in ensuring compliance with Consumer Duty regulations.”
