Advice Guidance Boundary Review: the path ahead

The FCA has published an update setting out the next steps in its work on the Advice Guidance Boundary Review.

In overview:

• A first consultation in December 2024 will focus on pensions support, setting out how the FCA envisages targeted support working for pension savers.  
• By the end of H1 2025 the FCA plans to develop related proposals for targeted support in relation to wider investments and consult on the draft FCA rules that will apply across consumer investments and pensions.
• Proposals for a simplified advice regime have not been dropped, with the FCA stating that it will engage directly with small advice firms in 2025 and use this and other engagement to gauge the willingness and capacity of these firms to offer a simplified advice service.  

This follows the FCA's proposals for targeted support, simplified advice and further clarification of the advice guidance boundary in an HM Treasury and FCA policy paper (DP 23/5) - see our earlier blog post here.

As the update reiterates, targeted support would entail a new form of support allowing firms to provide suggestions that are appropriate to consumers with the same high-level characteristics, while simplified advice would be intended to make it easier for firms to provide affordable personal recommendations to consumers with more straightforward needs and smaller sums to invest.

The update also sets out feedback received on those proposals, including that:

• A majority of respondents indicated that targeted support offered the best way of helping consumers at scale, but that targeted support would only be successful if consumers have confidence in it and if they understand what it is, and what protections it provides.
• Respondents saw a role for simplified advice but recognised that it may not meet the demands of the mass market. 
• There was interest shown towards the proposal for further clarification of the boundary between regulated financial advice and unregulated guidance but recognition that on its own it is unlikely to resolve the support gap.

The update also provides a link to a joint statement with The Pensions Regulator and the Information Commissioner’s Office intended to give firms greater clarity on communications they can make to help pensions and retail investment customers. 

It also sets the advice guidance boundary work in the context of the new product information framework for Consumer Composite Investments (CCIs) that will replace the EU-inherited PRIIPs Regulation and the UCITS disclosure requirements. The FCA intends to consult on proposed rules for the CCI regime in 2024, with the new regime expected to be in place in H1 2025.

There are therefore further publications to watch out for, even this side of the new year, as the FCA continues to look to push forward policy development in this area. 

We want people to be able to make informed decisions about their finances with confidence – and for people to have access to the help, guidance and advice to do so.

https://www.fca.org.uk/news/news-stories/advice-guidance-boundary-review-november-2024-update