Terms of reference
This document sets out the terms of reference for the Financial Advice Market Review.
The Financial Advice Market Review (FAMR) was launched in August 2015 to examine how financial advice could work better for consumers. It is co-chaired by Charles Roxburgh, Director General of Financial Services at HM Treasury and Tracey McDermott, Acting Chief Executive of the FCA.
The review is examining how to to stimulate the development of a market that provides affordable and accessible financial advice and guidance for everyone, at all stages of their lives. This builds on the government’s pension reforms which have allowed people real choice and freedom over their savings and given them access to free and impartial guidance.
The review is considering the current regulatory and legal framework governing the provision of financial advice and guidance to consumers. It is analysing how effectively the framework ensures that all consumers have access to the information, advice and guidance they need to empower them to make effective decisions about their finances.
The review is also seeking evidence from consumers about the barriers they face in seeking advice; the value they place on it and how easy it is to understand where advice can be found and what it means.
Ensuring the UK’s financial services industry works in the interests of consumers and supports working people at every stage of their lives is at the heart of the government’s long term plan. And a key part of this is making sure that people can access high quality, affordable, advice and guidance to help them make informed financial decisions.
Financial Advice Market Review: Call for input
On 12 October 2015 HM Treasury and the FCA published a Call for Input seeking views from all interested parties on how financial advice, considered in its broadest sense, could work better for consumers.
In particular, it sought views about:
- the extent and causes of the advice gap for those people who do not have significant wealth or income
- the regulatory or other barriers firms may face in giving advice and how to overcome them
- how to give firms the regulatory clarity and create the right environment for them to innovate and grow
- the opportunities and challenges presented by new and emerging technologies to provide cost-effective, efficient and user-friendly advice services, and
- how to encourage a healthy demand side for financial advice, including addressing barriers which put consumers off seeking advice
Expert Advisory Panel
The review will have a separate expert panel. The panel will be led by Nick Prettejohn, Chairman of Scottish Widows Group, and will comprise of senior figures representing financial services providers, financial advisors and consumer representatives.
On 14 March 2016, the FAMR published its final report setting out 28 recommendations to increase the accessibility and affordability of the advice and guidance that consumers want and need at all stages of their lives.
Affordability – steps to make the provision of advice and guidance to the mass market more cost-effective. The recommendations intended to allow firms to develop more streamlined services and engage with customers in a more effective way. These include a proposal that the FCA should set up a dedicated team to help firms developing large-scale automated advice models to bring these to market more quickly
Accessibility – measures to help consumers engage more effectively with advice. These include making consumers’ own information more easily available to them and those who advise them; the development of “rules of thumb” and the use of nudges to encourage customers to seek support at key life stages. The report also recommends measures to help employers to give more support to their staff on financial matters
Liabilities and consumer redress – recommendations to increase clarity and transparency about the way in which the Financial Ombudsman Service deals with consumer complaints. The report also makes recommendations in relation to the FCA’s review of funding of the Financial Services Compensation Scheme to assist advisers struggling to predict and budget for the levy they have to pay
In March 2016, the Financial Advice Market Review made 28 recommendations to make advice more affordable and accessible for consumers, at all stages of their lives. This progress report, produced jointly by HM Treasury and the Financial Conduct Authority, sets out progress towards implementing these recommendations after 12 months. The government is pleased to report that, following continued commitment from the government, regulators and the Financial Advice Working Group, all recommendations have been completed or are on track to be completed.