More people could access financial advice under proposals from the City regulator which could make getting guidance more affordable in certain circumstances.
The Financial Conduct Authority (FCA) is consulting on how to make it easier for firms to give more simplified forms of advice to consumers, to suit people’s individual needs.
Simplified forms of advice could help consumers with more straightforward needs and would not require a full assessment of all their financial circumstances.
This could make the process more accessible and affordable for people.
An example could be if a client wanted to invest a one-off lump sum into a single investment, the regulator said.
But where the financial situation is more complicated, such as deciding how to draw income in retirement from multiple sources, comprehensive forms of advice would still be likely to be more appropriate, as a firm would need to take account of a wider range of information.
Sarah Pritchard, deputy chief executive of the FCA, said: “For too long, the support people need to make important financial decisions has been out of reach for many.
“A market that provides good-quality, lower-cost, simplified advice, alongside comprehensive financial advice and targeted support, will better support people making decisions about their financial lives.
“We want to see more people getting supported, who aren’t currently, and a market that innovates and offers tailored services to meet differing consumer needs.
“We welcome everyone’s views on whether our proposals will achieve our aim of building firms’ confidence to offer a wider range of advice and ultimately to help consumers navigate their financial lives.”
The FCA said firms were already able to provide more simplified forms of advice but not many offered it, so to encourage innovation, it was proposing making some tweaks.
These included changes to give firms greater flexibility in how they designed and delivered ongoing advice services. There would be a move from a fixed annual suitability review to periodic reviews based on clients’ needs.
Qualification standards for advisers would remain unchanged.
From April, some financial firms would also be allowed to offer targeted support and suggest products to consumers based on what they would recommend to those in similar circumstances.
The consultation will close on March 22.
Chris Paskiewicz, policy adviser, conduct regulation at the Association of British Insurers (ABI), said: “The FCA’s work to simplify the advice rules is a positive step towards closing the advice gap.