The Financial Conduct Authority consults on guidance to clarify the boundary between different investment advice models

Published: 11/07/2014     Last Modified: 11/07/2014

Guidance to support firms which want to provide simplified advice or sales without a recommendation has been published by the Financial Conduct Authority (FCA) today. The guidance has been issued following ongoing FCA policy work and the output from a thematic review into the growth of new advice models, including simplified advice.

Christopher Woolard, director of policy, risk and research at the FCA, said:

"We want to ensure we have innovation in the advisory market and new, lower-cost options available. Today, we’re aiming to address some of the barriers that firms have identified to offering new, streamlined advisory products.

"We believe that a healthy retail investment market is one in which there are a number of different distribution models to suit a broad range of investors. We want to give firms the confidence to innovate to achieve that."

In particular, the FCA has provided further help for firms interested in offering an automated advice service by clarifying when a personal recommendation is given and shared examples to illustrate the point. In addition, the document provides guidance on the boundaries between a range of investment sales models and advice issued through different media, including social media. Today’s publication pulls together and replaces previous guidance.  

The thematic review that helped inform the guidance consultation has also been published today. The report looks at firms’ attitude to different advice models and describes how firms approached the design of distribution models where customers purchase investments without regulated advice.

Consumer research was conducted as part of this work, focusing on the motivations and experiences of consumers purchasing investments without a personal recommendation.

The FCA is also today asking for views on ‘Project Innovate’, which intends to help foster innovation in financial services by giving further support to those firms looking to bring new ideas to the market.  

Notes for editors

  1. Guidance consultation – Retail investment advice: clarifying the boundaries and exploring the barriers to market development.
  2. Thematic review - Services that do not include personal recommendations and simplified advice investment services.
  3. Consumer research - Services that do not include personal recommendations and simplified advice investment services.
  4. Project innovate – call for input.
  5. Martin Wheatley speech – The Technology Challenge, June 2014.
  6. On 1 April 2014, the FCA took over responsibility for consumer credit and the regulation of 50,000 consumer credit firms, including logbook lenders, payday lenders and debt management firms.
  7. On 1 April 2013 the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  8. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure and appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.  These statutory objectives are outlined in the Financial Services Act 2012.
  9. Find out more information about the FCA.

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