The Financial Advice Market Review (FAMR) was launched in August 2015 to explore ways in which government, industry and regulators can take individual and collective steps to stimulate the development of a market to deliver affordable and accessible financial advice and guidance to everyone.
The Review has been jointly led by HM Treasury and the Financial Conduct Authority (FCA).
Read the terms of reference of the review.
FAMR progress report
The FCA and the Treasury have published a progress report reporting on the progress towards implementing the FAMR recommendations. The FAMR final report set out 28 recommendations which are addressed in the progress report.
We are consulting on guidance intended to clarify the regulatory framework. The guidance relates to four of the recommendations made by FAMR in its final report.
Recommendations of the Financial Advice Working Group
FAMR recommended the establishment of a Financial Advice Working Group (FAWG), to support progress in the 12 months following the Review’s final report.
The Financial Advice Working Group was established in June 2016 and has been chaired by Nick Prettejohn. It has been responsible for taking forward the three recommendations assigned to it by FAMR via three subgroups and has published three reports together with a foreword from Nick Prettejohn.
- Foreword from Nick Prettejohn (PDF)
- Rules of Thumb and Nudges: Improving the financial well-being of UK consumers (PDF)
- Financial well-being in the workplace: A Way Forward (PDF)
- Consumer explanations of “advice” and “guidance” (PDF)
The package of measures recommended by FAMR has the potential to promote a tangible improvement in affordability and accessibility of advice and guidance. Continued focus is needed to ensure the measures are effective and this can only be achieved through a multi-faceted approach. Continued commitment and co-operation is needed - not only from regulators and the government, but also employers, consumer groups and the financial services industry. The FCA and the Treasury will conduct a review of the outcomes from FAMR in 2019.
Final report and recommendations
FAMR published its final report on 14 March 2016. The review builds on improvements made to the financial advice industry brought about by the Retail Distribution Review (RDR) which raised the standards of professionalism across the financial advice market.
The recommendations outlined in the report were aimed at:
- providing affordable advice to consumers
- increasing the accessibility of advice
- addressing industry concerns relating to future liabilities and redress, without watering down levels of consumer protection.
The government and the FCA Board welcomed the report on 16 March 2016 and accepted the recommendations directed at the Treasury and the FCA respectively. The report also made recommendations directed towards employers, service providers and consumer groups.
The recommendations fell into 3 key areas:
- Affordability – these included proposals to make the provision of advice and guidance to the mass market more cost-effective. FAMR made a number of recommendations intended to allow firms to develop more streamlined services and engage with customers in a more engaging and effective way. These included a proposal that the FCA should set up a dedicated team to assist firms that are seeking to develop large scale automated advice models to bring those to market more quickly. In response the FCA set up its Advice Unit in May 2016, providing regulatory feedback to firms developing automated advice models.
- Accessibility – these recommendations were aimed at increasing consumer engagement and confidence in dealing with financial advice. FAMR proposed a number of measures to help consumers engage more effectively with advice. These included making their own information more easily available to them and those that advise them; the development of 'rules of thumb' and the use of nudges to encourage customers to seek support at key life stages and recommendations intended to help employers give more support to their staff in financial matters.
- Liabilities and Consumer Redress – some industry stakeholders suggested that concerns about future liability were preventing them giving advice today. FAMR made a number of recommendations to address these concerns while ensuring consumers have adequate protection. FAMR made recommendations to increase clarity and transparency about the way in which the Financial Ombudsman Service deals with consumer complaints. The report also included proposals relating to the funding of the Financial Services Compensation Scheme (FSCS) to assist in managing longer term liabilities.
Call for Input responses
FAMR has published the non-confidential responses received via the web form.
Those that did not respond via the web form are ordered alphabetically below.
- Part 1: A (also including LSG, Virgin Money, and Pensions Portal)
- Part 2: B-C
- Part 3: D-H
- Part 4: H-L
- Part 5: L-N
- Part 6: N-P
- Part 7: P
- Part 8: P-S
- Part 9: S-T
- Part 10: T (also including EY)
- Part 11: T-Z
Survey of firms providing financial advice
The FCA carried out a survey of 233 firms active in providing financial advice on retail investment products in November 2015. The report summarises the results of the survey:
The results from this survey informed FAMR and the proposals recommended. Additionally, the results of this survey are being used to inform our ongoing supervisory work in this area.