In November 2015, the FCA surveyed 233 active firms providing financial advice on retail investment, including financial advisers, networks, banks and life insurance companies to inform the Financial Advice Market Review (FAMR). The FCA has also made it clear that the results from this survey will form part of its on-going supervisory work in this area.
The FCA published the results on the 28th April 2016. The report is set out under the following topics:
- Customers of firms providing advice;
- Charging for advice;
- Questions specific to retirement income advice;
- Advice channels and use of technology; and
- Advice market future and barriers.
In relation to advice market future and barriers the FCA’s survey found:
- 29% of firms said they expected to increase their use of platforms;
- 32% of firms expected to grow their number of advisers over the next year (around three-quarters of firms in the large and medium segment said they planned to increase their adviser numbers);
- The majority of firms planned to use more technology, particularly in customer communications and to increase efficiency and reduce the costs of the advice process;
- A relatively small proportion of firms (11% or less) expected that, over the next year, they would increase their mass-market, low-cost advice proposition or the provision of generic advice;
- In relation to potential barriers to the provision of mass-market advice propositions and automated advice propositions, 72% of firms said that customers’ preference for personal interaction with an adviser was a ‘very important’ or ‘important’ barrier to providing automated or technology-supported advice; generally, the larger firms viewed it as less of a barrier than smaller firms;
- 19% or less of firms reported a lack of customer trust in automated propositions;
- In terms of important barriers to providing ‘mass market’ advice, the majority of firms (63% and 61% respectively) stated regulatory factors, such as fees and levies, and the cost of compliance with FCA rules and reporting requirements.
- The risks and costs of potential liability for the advice were also regarded as a very important barrier by 52% of firms.
FSTP are recommending that firms make sure they are fully aware of the content of this survey, and ensure that they incorporate the findings into their ongoing training. Should these results raise any questions around your training, please contact FSTP to discuss how we could help.