Financial Advice Market Review (FAMR)

The Financial Advice Market Review (FAMR) was launched in August 2015 to examine how financial advice could work better for consumers.

The review was co-chaired by Charles Roxburgh, Director General, Financial Services at HM Treasury and Tracey McDermott, acting CEO at the FCA, and comprised joint secretariat including FCA and HMT staff.

The aim of the review has been 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.

Read the terms of reference of the review.

Scope of the review

The Review has taken place alongside the introduction of the pensions freedoms, announced in April 2015.  It has also taken place some three years after the introduction of the Retail Distribution Review (RDR), which was introduced to address the root causes of problems that had persisted in the retail investment market over the years.

The Review has explored the supply and demand sides of the market for financial advice and guidance, the barriers to providing these services and the potential remedies. FAMR launched a public Call for Input on 12 October 2015, and subsequently engaged with a wide range of stakeholders – representing both the industry (including large and small providers) and consumers. FAMR was also supported by an Expert Advisory Panel, chaired by Nick Prettejohn, who provided input during the review.

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 are aimed at:

  • providing affordable advice to consumers
  • increasing the access to 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 HMT and the FCA respectively. The report also makes recommendations directed towards employers, service providers and consumer groups. 

Read the FAMR final report

The recommendations fall into 3 key areas:

Affordability – these include proposals to make the provision of advice and guidance to the mass market more cost-effective. FAMR makes 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 include 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.

Accessibility – these are aimed at increasing consumer engagement and confidence in dealing with financial advice. FAMR proposes a number of measures to help consumers engage more effectively with advice. These include 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 are preventing them giving advice today. FAMR has made a number of recommendations to address these concerns while ensuring consumers have adequate protection. FAMR has made recommendations to increase clarity and transparency about the way in which the Financial Ombudsman Service deals with consumer complaints. The report also includes proposals relating to the funding of the Financial Services Compensation Scheme (FSCS) to assist in managing longer term liabilities. 

Next steps

FAMR has recommended a package of measures that has potential to promote a real improvement in affordability and accessibility of advice and guidance to people. For the vision to be realised, there needs to be continued commitment/co-operation not only from regulators and Government but also employers, consumer groups and the financial services industry.

Call for Input responses

FAMR received 268 responses to the Call for Input. The full list of non-confidential responses can be found in Annex C of the FAMR final report.

FAMR has published the non-confidential responses.

Responses received via the web form

Those that did not respond via the webform 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

Financial Advice Working Group

FAMR recommended the establishment of a Financial Advice Working Group, to support progress in the 12 months following the Review’s final report.

The Financial Advice Working Group was established in June 2016. It is responsible for taking forward the three recommendations assigned to it by FAMR. Find out more about the Working Group and its members, and read the Terms of Reference.

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:

Survey of firms providing financial advice

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.