Regulation

FCA probes 'unsuitable' investment advice in new Call for Input

Rozi Jones
|
15th September 2020
FCA new
"In a complex and diverse market with more than 5,000 advice firms and over 27,000 advisers, it’s essential that consumers have confidence in the suitability of advice they receive."

The FCA is seeking views on how to improve the consumer investment market, stating that "too often consumers are offered unsuitable products or advice".

In a statement, the FCA said: "In a complex and diverse market with more than 5,000 advice firms and over 27,000 advisers, it’s essential that consumers have confidence in the suitability of advice they receive."

The regulator also says consumers are receiving "lower returns than they should" because of unsuitable products with high fees.

The new Call for Input follows a permanent ban on the mass marketing of speculative mini-bonds in June.

Aegon’s pensions director, Steven Cameron, said that the Call for Input is "is extremely wide ranging and brings back memories of the Financial Advice Market Review". He added that "there’s likely to be something here that every adviser firm across the UK will have an interest in".

The CFI is seeking views on the following key questions:

- What more can we do to help the market offer a range of products that meet straightforward investment needs?
- How can we better ensure that those who have the financial resources to accept the risks of higher risk investments can do so if they wish, but in a way that ensures they understand the risk they are taking?
- How can we use the regulation of financial promotions to make it easier for people to understand the level of regulatory protections afforded to them when they invest?
- What more can we do to ensure that when people lose money because of an act or omission of a regulated firm, they are appropriately compensated and that it is paid for fairly by those who cause the loss?
- How can people be better protected from scams?
- How do we help this market to be competitive, with firms striving to offer better products and services?

The FCA’s interim chief executive, Christopher Woolard, said: "The consumer investment market is not working as well as it should. There have been too many scams and scandals and too often consumers are offered unsuitable products or advice. As a result, many consumers lack confidence in the investment market.

"This call for input is aiming to help shape the future of consumer investments, including regulation, to ensure consumers can have faith in the market.

"We’ll be considering all contributions carefully as we open this debate on the future of the consumer investment market."

Aegon’s pensions director, Steven Cameron, commented: “The FCA’s Call for Input on the Consumer Investment Market is extremely wide ranging and brings back memories of the Financial Advice Market Review. Topics under consideration include mass market versus high risk investments, the advice versus guidance debate, consumer compensation and how to ensure ‘polluter pays’, scam prevention and technological innovation. There’s likely to be something here that every adviser firm across the UK will have an interest in.

“It’s important that the FCA does keep a focus on protecting people from scams and stamping out the small minority of poor advice. But this needs very different treatment from supporting the growth of a market which can support more people in the way that works for them, cost effectively. That could be holistic ongoing advice, one-off or simplified advice, more tailored forms of guidance or better constructed information.

“At the heart of this, we need to make sure the vast majority of highly professional financial advice firms aren’t burdened with ever increasing FSCS levies or Professional Indemnity premiums.”

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