City watchdog launches review of the financial advice market
The City watchdog today launched a review of the financial advice market amid concerns investors are paying too much.
The Financial Conduct Authority’s review will look at what consumers want from the market and how the market works to deliver this.
The FCA will review how changes made since 2012, including the retail distribution review (RDW) and the financial advice market review (FAMR), need updating. It will publish its findings in 2020.
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It will also examine how new trends and developments may affect the future development of guidance and advice services.
Christopher Woolard, executive director of strategy and competition at the FCA said: "Consumers and the market are changing rapidly, as technology, employment patterns and inter-generational challenges change the way consumers interact with financial services. As well as looking at how the market has evolved…it’s important that our work looks ahead to see how we ensure that this important sector works well in the future.
"We want the market to deliver a range of good quality, affordable advice and guidance services that meet consumer needs."
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Ian Sayers, chief executive of the association of investment companies, said: “We welcome the FCA’s call for input. in evaluating RDR. The changes RDR put in place were a significant step in the right direction to improve financial advice to retail investors. Purchases of investment companies by advisers and wealth managers on adviser platforms have increased five-fold since RDR, from £219m in 2012 to nearly a billion in 2018.“However, there’s still more work to be done. The majority of advisors are not recommending investment companies to their clients despite investment companies’ many benefits. We look forward to continuing to work with the FCA and contributing to the call for input.”
The FCA is seeking feedback by 3 June. It will also hold several stakeholder events and collect further data through consumer research and surveys of sample firms.