Simplified Advice, Non-Advised Sales and related matters

The FCA has issued two new documents that are important for firms selling products using a simplified advice or non-advised sales process. 

The new Guidance Consultation GC14_03 entitled ‘Retail Investment Advice: Clarifying the boundaries and exploring the barriers to market development’ which can be located here attempts to explain the boundaries between full advice, limited advice, focussed advice, simplified advice, non-advice and execution only. It also explains when generic advice becomes regulated advice and the difference between advice and giving information.

The document summarises the existing regulatory regime and distribution models and, to name but a few, the T&C, Appropriateness, Suitability and Adviser Charging requirements. 

Additionally, tying into other recent documents issued concerning complex products held in SIPP wrappers, it summarises when the appropriateness test needs to be applied for a client  wishing to purchase a complex product without receiving advice.   

The Thematic Review document TR14_10 ‘Developments in the distribution of retail investments: Purchasing investments without a personal recommendation or with simplified advice’ which can be located here provides further useful information for those firms who allow customers to purchase investments without a personal recommendation (execution-only).

Finally, for further reference, in March 2012 the FCA issued Final Guidance document FG 12_10 here regarding simplified advice; those firms undertaking simplified advice processes should understand this document.

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

ATEB Suitability provides report writing software for the financial services market.

Our View

On the face of it, this consultation’s attempt to clarify matters is good news. However, we are not fully convinced that clarity has been achieved. There is nothing particularly new in the guidance but firms do need to understand the barriers and boundaries.

Both simplified advice and non-advice sales processes can be complex and risky. Firms actively involved in these markets need to have an in depth and thorough understanding.

ATEB has been working closely with firms, including providers, to help them develop their simplified offerings and we will be discussing the issues raised in this consultation directly and face-to-face with our clients.

Action Required By You

  • The person responsible for compliance should read these documents;
  • If your firm is affected by any of the issues then you should review your relevant processes and procedures;
  • We recommend that all firms have a defined investment proposition / process in place, which should be strictly and consistently applied across all advisers and which should be monitored;
  • ATEB clients should discuss any issues directly with their nominated consultant;
  • Any other firms requiring support or guidance should contact us here.

 

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About the Author

Steve is an ATEB Director and has a deep understanding of all matter regulatory, built up over his 30 years + in the industry. With a training background and a technical brain, he overseas numerous complex projects and client implementation work.

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