The Financial Conduct Authority (FCA) has said its “mindset is changing” as it attempts to make financial advice more accessible to consumers.
The watchdog is aiming to shift the way it regulates to take a “more outcomes-based approach”, said Sarah Pritchard, executive director of markets and international at the FCA, in a speech today.
With the regulator moving away from a “prescriptive” approach, Pritchard said it would be taking more “bold” and “proactive” steps in the coming years.
This will include a “once-in-a-generation opportunity to undertake a review of our rules,” focusing especially on the poor uptake of financial advice in the UK.
Only eight per cent of adults currently use financial advice, while earlier this month, Barclays reported that 13m people were holding £430bn cash savings that could be put to better use in investment.
‘Lack of confidence holding people back’ – FCA exec
“A lack of confidence may be holding people back – 43 per cent think investing is too risky, and a quarter that it is too complicated,” said Pritchard.
“We want to see a thriving consumer investment market where consumers can make more informed decisions, based on their risk appetite.”
Pritchard noted that one reason many people are failing to get financial advice was fear from companies of overstepping the line between guidance and recommendation, a bugbear of the industry for some time.
Vanguard specifically, has said it was “very excited” about reviews from the Treasury and the FCA on the topic, which could allow for a middle way between the two areas, which the company has termed “targeted advice”.
“The next thing we would think of is, how do we actually implement [targeted advice] at scale, which starts to reduce the advice gap,” said Sean Hagerty, leader of the firm’s European business.
Pritchard seemed to agree, stating that the FCA wanted to see “a continuum of help being offered”, rather than the current cliff edge of regulation.
The FCA boss also said that the regulator’s ongoing review of cost disclosure rules, which hit a breakthrough last week after dropping investment trust requirements to ‘double dip’ their fees, would start consulting on changes this autumn, with rules finalised in the first half of next year.
“We acknowledge that current disclosure rules have not necessarily resulted in useful information being available at the right time or in the right place in the consumer journey,” added Pritchard.
Meanwhile, the FCA has also launched a ‘call for input’ on Consumer Duty rules, which have entered their second year in place, that will close on 31 October.