The UK's Financial Conduct Authority is consulting on a new investment advice regime to allow consumers to access simplified advice on investments that qualify for stocks and shares ISAs from April 2024, and reflecting the fact that the new Consumer Duty will apply.
The FCA's research revealed that "less wealthy" consumers do not access professional support where they want it to make financial decisions like investing in stocks and shares ISAs. Those who receive advice are those who already hold investment products. Investors are more confident in a personal recommendation and value human interaction in the advice process. If offered a free consultation, only 6% of adults would choose a robo-adviser, whereas 51% would choose to meet face-to-face with an adviser (Mintel, 2021).
The FCA plans to:
- Cut the existing qualification requirements to reflect the lower risk of the narrower scope of advice (the necessary technical and regulatory understanding to advise on mainstream investments and where clients have straightforward needs).
- Reframe the suitability requirements to reflect the narrower scope and less complexity of the advice relevant to the more limited decision consumers will be making, with new guidance on minimum information expected for the 'fact find' to reduce time and liability consequences for firms not doing a more fulsome inquiry.
- Limit the range of investments advisers can recommend to a set of mainstream investments and excluding any recommendations to invest in high‑risk investments.
- Allowing consumers to pay for transactional advice in instalments.
You have until 28 February 2023 to respond to the FCA's consultation.
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