|The definition of financial advice||GENERAL|
HM Treasury and the Financial Conduct Authority (FCA) have been working together since August 2015 examining various options to improve access to financial advice for individuals especially those who do have significant wealth or income. This research took place under the umbrella of the Financial Advice Market Review (FAMR) which looked at ways to provide people with timely financial advice that is free and impartial.
One of the recommendations put forward as part of the FAMR looked at amending the definition of regulated advice. The FAMR found that many firms were unwilling to provide financial advice to consumers with ‘simple’ needs. A key reason for the reluctance was concerned with issues over the provision of regulated advice without meeting the higher regulatory requirements. A consultation on this issue was published in September 2016.
Following the consultation, the government has decided to change the definition of financial advice for regulated firms. Regulated firms will therefore be giving advice only where they provide a personal recommendation. The new definition will come into effect on 3 January 2018.
The government will leave the wider Regulated Activities Order (RAO) definition of advice as “advising on investments” in place for unregulated firms. This dual approach will give greater certainty to regulated firms, whilst mitigating the risk of consumers being scammed.
March 3rd, 2017