The Financial Conduct Authority’s proposed core investment advice is unlikely to be of interest to many adviser firms due to its limitations, according to Manchester-based B-Compliant.
Last week, the FCA published a consultation paper proposing to relax independent advice rules to make it cheaper and easier for firms to advise consumers about certain mainstream investments within stocks and shares Isas.
The regulator said it would create a separate, simplified financial advice regime to improve people’s access to financial advice.
As part of the regime, the FCA said it will create a new handbook definition of core investment advice.
It proposed the overall definition comprises: advice may only be given on investments into a new stocks and shares Isa, advice may only relate to investments up to the value of the annual Isa subscription limit set by the Treasury; and advice may only be given on a sub‑set of investment products held within a S&S Isa.
However, B-Compliant director, Vicky Pearce, said: “If the regulator’s plans are implemented, those looking to participate would only be able to do so in the first year of investment and only up to the value of the Isa allowance of £20,000.”
The FCA consultation on the regime closes at the end of February and it is expected core investment advice will be available from April 1, 2024.
B-Compliant is urging firms to respond to the consultation, as it believes there will be little uptake in its current form.
“Firms will not be required to offer simplified advice, but done properly, it could be of interest to many,” Pearce said.
“The proposals are a move in the right direction and are certainly a step towards reducing consumer harm. However, the one-off and transactional nature of the service is unlikely to appeal to the majority of our client firms, particularly considering the additional regulatory burden it will place on them.”
The FCA said it will limit the regime to advice relating to investments held within a S&S Isa wrapper in order to keep the tax implications as simple as possible for investors.
The proposals included the relaxation of the independent and restricted adviser definition, stating that it would introduce an additional rule in COBS 6.2B where that “advice under the core investment advice regime is capable of constituting independent advice despite the firm not considering a full range of financial instruments”.
Pearce added: “In their current form, the proposals would see advisers having to conform to three respective, yet interconnected regulatory regimes.
“The principle of simplified advice is grounded in consumer duty, but if a client has sustainable investment objectives, there will also be a tie-in to the new sustainable disclosure proposals.”
sonia.rach@ft.com
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