The Financial Conduct Authority (FCA) has provided new guidance to advisers on what they can say to clients during the Covid-19 crisis, how to tackle common consumer misconceptions, and how to offer support without straying into regulated advice.
The guidance is part of the FCA’s 2020/21 wider business plan published recently and steps up the institution’s scrutiny of retirement advice amid ongoing concerns about significant risks to consumers stemming from pension of ‘freedom and choice’.
“We will measure progress by assessing a variety of indicators. For example, we will continue assessing suitability of defined benefit (DB) to defined contribution (DC) transfer advice and start assessing suitability of decumulation advice,” said the FCA in its business plan.
Stephen Lowe, group communications director at Just Group, commented: “It [the FCA] is particularly concerned about consumers being exposed to more investment risk than they expected or can absorb, and that the decision-making support available is not working well enough.
“It is unfortunate that some of the important work needed to build further safeguards for people who don’t receive regulated advice – such as the introduction of investment pathways that was due this summer – may be delayed due to the impact of the coronavirus epidemic.”
The FCA’s business plan also identifies the investment distribution process and the support network around it. The regulator says it isn’t working well enough for consumers to make effective decisions about their investments and that they should have access to high-quality advice and support.
A review of the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR) is already looking at developments in the financial support market to assess whether consumer needs are being met.
Tom McPhail, head of policy at Hargreaves Lansdown says: “Consumer confidence in a safe and effective retail investment market is vital to ensure people can save and invest for their future. A great deal of good progress has been made however it is a constant battle against both the fraudsters and the complexity of a market with which many people are unfamiliar in their day to day lives. They often need help and guidance and it needs to come from trusted partners; this initiative should help to achieve these aims.”