IA work on Advice/Guidance

In 2022, the IA convened the CISF, together with TISA, ABI, UKFinance, AIC and PIMFA. The group meets regularly to discuss how to move aspects of the FCA's consumer investment strategy forward, and it has been instrumental in Consumer Duty implementation.

In September 2022, the CISF sent a joint letter to the Chancellor laying out our case for reform of the advice/guidance boundary and for a simplified advice proposition. ​In December we received a positive response from the Economic Secretary to the Treasury Andrew Griffith, which ultimately led to meetings with senior leadership of the FCA, including Sarah Pritchard and Therese Chambers and later on a joint meeting between the CISF, the Economic Secretary to the Treasury and Sarah Pritchard.

These meetings led to the formation of an Industry Working Group which assists the FCA and HM Treasury in their holistic review of the boundary.

Recent Policy Developments on Advice Guidance Reform

In 2022, the FCA and HM Treasury undertook a joint review of the advice/guidance boundary. The key themes which have emerged from the work are:

• Addressing this issue is not solely about amending regulated advice. The diversity of individuals' needs, which fluctuate throughout their lives, calls for firms to offer versatile and adaptable support for varying financial decisions.
• Boosting support to a larger population necessitates a shift in perspective, where firms and consumers manage risk rather than completely eliminating it. Risk contributes significantly to the cost incurred by firms and, consequently, consumers, which directly affects the extent of available support.
• The solution's success is contingent upon commercial provision of support. Thus, the review should focus on outcomes, and design a regulatory system where commercially sustainable models can arise.
• The review should also harness the Consumer Duty, setting clear expectations of firms' support for their customers and ensuring consumer protection remains paramount in any future system. The FCA will collaborate closely with the Financial Ombudsman Service on this.

As part of the review the FCA and HM Treasury published a joint Discussion Paper on the Advice Guidance Boundary Review in December 2023, which includes proposals for reforming both financial advice and guidance.

The policy paper includes three proposals for discussion:

• Further clarifying the boundary: This builds on the August 2023 clarification document which sought to clarify how the boundary affects firms. The FCA's aims are to provide more guidance or simplify existing guidance for FCA-authorised firms to help them offer more support to consumers without crossing into regulated advice or personal recommendation.
• Targeted support: This proposal explores a new regulatory framework that allows firms to use limited personal information about a customer and their circumstances to suggest products or courses of action based on a target market the consumer belongs to, this would be done through 'people like you' statements. This guidance could be offered without explicit charges and is not a personal recommendation.
• Simplified advice: This proposal builds on the feedback from the FCA's proposals on Core Investment Advice from 2022 and considers a new suitability-light advice regime that enables firms to provide a simplified form of advice based on relevant information about a specific consumer need, with explicit charges and personal recommendation. The IA response to the consultation on Core Investment Advice can be found here.