NO CHANGE TO SUITABILITY RULES – STREAMLINED GUIDANCE WILL FAIL THE IFA SECTOR
FCA TARGET ISA’S FOR STREAMLINED GUIDANCE
The FCA have issued a paper to assist their competition objective and widen advice under the catchy title “Broadening access to financial advice” SEE HERE
It is with some excitement that IFAC pick up the FCA’s latest attempt at lowering the bar to advice. Simplified and basic advice were both strangled at birth by our industry, more fearful of FOS jurisdiction than FCA encouragements. How will this one fare? IFAC wondered.
The very first paragraph we turned to in the new proposed rules was listed under “Suitability”, and reads:
“We are not proposing any new requirements or amendments to existing COBS 9A requirements for the assessment of suitability.”
A very bad start indeed. And if you want an excuse for that, read the very next words:
”…Many of these requirements are derived from the MiFID Org Regulation, which is retained EU law, and are copied out into COBS 9A. We are proposing new non Handbook guidance to outline how firms can undertake a streamlined suitability assessment with a client, having regard to the existing provisions and using the flexibility built into the MiFID Org Regulation, given the ‘nature and extent’ of the core investment advice service.”
The initiative may already be stillborn, and we haven’t got to page two yet.
We left the EU six years ago, but the elite remainers who govern the UK want to keep their foot on our neck, with continued enforcement of EU rules. As if to say, it was their fault, and they deserve this.
There will, however, be “non-handbook guidance.” Is this like guidance to referees before they go into a football tournament? Football finishes at 90 minutes. But our careers have no final whistle, and indeed, not even the legal long stop of 15 years. The rules are not changing. Will FOS and a court of law help you out, by referring beyond the rules to “non-handbook guidance”?
It seems at this VERY early stage that our processes cannot change.
Under the broader heading of Training and Competence, there will be changes to help platforms muscle in when customers whinge about having to pay an adviser for advice. Admin staff on the journey to level 4, can now aim at a stripped down examination, whereby they take just the two core modules in order to advise on ISAs….these modules are
- Financial Services, Regulation and Ethics and
- Investment Principles and Risk.
Given the numbers and commissions involved in ISAs, you can’t help but think that for IFAs, this bird is not going to fly. But it may help the giants to stoop down. Expect competition from platforms such as Abdn, who have welcomed this in the media.
Further updates to follow and IFAC will be looking to make submissions to the Consultation.