15 September 2011

CII: FSA Guidance Consultation - 'Simplified Advice'

Key points include:

• Training and competence requirements for those making personal recommendations to clients through the simplified advice route will be the same as for a fully-qualified retail investment adviser.
• The RDR's adviser charging rules will also apply to the delivery of simplified advice.
• Simplified advice is a form of 'restricted advice'. If a firm provides simplified advice in addition to independent advice, it should not promote itself as a provider of independent advice for its business as a whole.
• Simplified advice provided through a completely automated system must involve a fully-qualified retail investment adviser to help design the system and confirm it is fit for purpose before use.

Background

As part of the RDR, the FSA looked at whether a 'streamlined advice process' might help meet the investment needs of low- and middle-income earners. Following the FSA's final rules on professionalism, adviser charging and use of platforms, this consultation paper sets out to clarify the FSA's approach to regulating simplified advice in a post-RDR world.

What is simplified advice?

The FSA has adopted the term 'simplified advice' to mean a limited form of advice that is focused on one or more specific needs and does not involve analysis of the customer's circumstances that are not directly relevant to those needs. In the FSA's view, simplified advice may be 'appropriate' for consumers who:

• "Have their priority needs met, do not need to reduce debt, have adequate savings and have their core protection needs met.
• Have some disposable income.
• Do not want holistic assessment of their financial situation, but rather advice on a specific investment need."

Full briefing

Guidance Consultation

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