‘Where are the frontiers between execution only on the one hand and full advice on the other?’ So queried the CEO of the country’s financial regulator, Martin Wheatley. It would be reasonable to suppose that he would have known this. However, he did go on, rather less alarmingly, to ask ‘is there room for firms to offer advice which is limited or focussed on a specific consumer problem?’

Non Advised Versus Advised

This of course is all part of the fallout from RDR which drastically limited access to independent financial advice for a large part of the population. Now, the regulator which imposed these limitations is seeking ways to re-enfranchise that section of the populace which is suffering from lack of advice. The issue now is not so much execution only versus advice, that is pretty clear cut, but between advice and ‘guidance’. For example, when a customer receives a list of suggested funds after completing an on line questionnaire is this advice or guidance? Perception is paramount. If the regulator considers that it was reasonable for a customer to have considered that he was being given advice, then that is how the case will be treated, regardless of any disclaimers which may have been signed. The FCA has said that it will provide guidance to IFAs helping to clarify the boundaries between investment products sold with advice and those sold with just guidance. The sooner the better as there has recently been a proliferation of on line investment websites which claim not to be giving advice although many seem to have one foot over the border. There is also the added problem of that voracious, out of control consumer champion – the FOS – which is always eager for a new source of complaints.


The above is the lead article in our monthly News Notes. Please click here for information regarding these notes.