Britain proposes simpler financial advice to cut costs for consumers

By Huw Jones

LONDON (Reuters) – Britain has proposed simplifying rules on financial advice to allow banks, insurers and investment firms to give information to less wealthy customers without having to comply with stringent safeguards that bump up fees.

The government had said it would review and clarify the “regulatory boundary” between formal financial advice, which is heavily regulated and thus making it more expensive, and cheaper forms of information and support.

“These proposals aim to create a regulatory system where a range of commercially viable, high quality models of support will be in place enabling consumers to access better support,” the Financial Conduct Authority (FCA) said in a statement on Friday.

Regulators are keen that a wider range of people get financial information following a string of mis-selling scandals going back decades. Only 8% of UK consumers received full financial advice last year.

“The gap between holistic financial advice that is unaffordable for many, and guidance that is free to access but not personal to the consumer, is simply too vast,” Britain’s financial services minister Bim Afolami said in a statement.

A “middle ground” that is affordable and accessible is needed, he said.

The FCA and the finance ministry have proposed further clarifying when firms can give customers support without it being deemed regulated financial advice.

It also proposes allowing firms to provide support tailored to groups of people in similar circumstances.

There would also be a new form of simplified advice that makes it easier for firms to provide affordable personal recommendations to clients that have smaller sums to invest.

“These bold proposals are exactly what’s needed to help customers receive good outcomes,” said Philip Deeks, director of the regulatory insight centre at KPMG UK.

“There is also much welcomed additional clarity around how firms can nudge and guide customers to make informed decisions without overstepping into advice,” Deeks said.

PIMFA, an industry body for financial advisers, said the proposals would go some way to ensuring that people were able to access targeted financial advice.

(Reporting by Huw Jones; Editing by Mark Potter)