This Policy Statement sets out our response to feedback on new perimeter guidance on what constitutes a personal recommendation, which we published in consultation CP17/28: FAMR Implementation Part II and insistent clients (PDF).
FAMR was launched jointly by HM Treasury (HMT) and us in August 2015 to explore ways in which government, industry and regulators could stimulate the development of a market that delivers affordable and accessible financial advice and guidance to everyone, particularly those who do not have significant wealth or income.
In its final report in March 2016, FAMR set out a series of recommendations intended to tackle the barriers to consumers accessing advice and guidance.
FAMR identified that firms were concerned about providing information and support to help consumers make their own investment decisions in case they inadvertently made a personal recommendation and trigger a number of regulatory requirements, in particular our suitability rules. Therefore, FAMR recommended that the FCA should consult on new guidance to help firms that provide services that do not involve a personal recommendation.
In August 2017 we published CP17/28 which set out proposals developed to implement a number of FAMR recommendations, including Perimeter Guidance on what constitutes a personal recommendation.
The aim of our new Guidance is to give firms greater confidence that they can, among other things, inform a customer that they have not increased their pension contributions over a long period of time, warn a customer about any adverse consequences of a transaction they propose to make, or offer products designed to meet a particular investment objective without necessarily making a personal recommendation.
In general, respondents to CP17/28 were supportive of the new Perimeter Guidance, and we will be proceeding largely on the basis on which we consulted. In response to feedback raised by stakeholders, our final Guidance covers some new illustrative examples as well as some new clarificatory amendments.
This publication of this PS and the new Guidance means that we have now implemented all of the recommendations made to the FCA in the FAMR Final Report.
Consumer Guide on ‘advice’ and ‘guidance’
The Financial Advice Working Group (FAWG) set up following the FAMR Final Report also made a recommendation last year that we should adopt a single consistent set of consumer friendly explanations for the terms 'advice' and 'guidance'.
To address this recommendation we are today publishing a consumer guide that explains what consumers can expect from these services, covering in high level terms who might offer these services, what rules apply to them, and what recourse a consumer would have if things go wrong. The guide is designed to act as a basic introduction for consumers who might be considering where to go to get help with investing.
Who this applies to
This Policy Statement is primarily relevant to:
- financial advisers
- consumers and organisations representing consumers
- providers of retail investment products (RIPs), particularly those with direct-to-consumer distribution channels
- trade and professional bodies that represent financial advisers, product providers, and other firms involved in the distribution of RIPs
- compliance consultants and other firms that assist stakeholders
- discretionary investment managers
This Policy Statement represents the last piece of work to implement the recommendations made to the FCA as part of FAMR. In 2019 we will be reviewing the advice market as part of our review of FAMR implementation and the next phase of the post-implementation review of the Retail Distribution Review. We will publish our findings in early 2020.