The ‘log-jam’ effect of fear of Ombudsman claims will be addressed in the FCA’s conclusions from the consultation into simplified and non-advised sales processes, the regulator’s technical specialist Rory Percival told a conference this morning.
Speaking at an eValue conference in London today, Percival said the Ombudsman effect was factored into the FCA’s findings, which are due to be published shortly. But he said the industry would have to wait for publication of the FCA’s response to find what the regulator’s position is on the issue.
Fear of Ombudsman claims has been a key factor in deterring firms from establishing simplified advice or non-advised solutions.
But Percival said the consultation will not have as its central focus the key broader issues of how simplified financial advice can be structured to meet the needs of the 400,000 plus people reaching retirement each year who now have a greater need for guidance.
Percival also expressed concerns over advisers shoehorning clients into centralised investment propositions.
Percival said: “Our objectives are to ensure that the retail market is functioning properly. Our thematic review into the market is looking to understand how the market is working and whether the regulatory framework is promoting good outcomes, and also why firms are struggling to develop simplified advice propositions.
“The Ombudsman is governed by different rules to us and what they do is not down to us. There is reticence in simplified advice coming to the market and we have heard that the ombudsman is a log-jam. You will have to wait and what comes out when we publish our paper. We are mindful that the Ombudsman is an issue and that has been factored into our thinking.”
EValue director of strategy Brian Moss said: “It will be crucial that we have a regime in place to deal with the new Budget freedoms. Post Budget the industry needs to raise its game by adopting a more suitable approach for the ‘at and post-retirement markets’ in order to achieve better outcomes for all.”
Annuity Line head of business development Billy Burrows says: “Simplified advice should be targeting the at-retirement market, not people with £50,000 that they want to put in some investment funds. There is such an obvious need for something that fills the gap between no advice and full advice.”