CISI responds to major advice review by saying charges are too high
Advisers’ charges are simply too high for consumers with smaller assets, the CISI has told bosses leading a major review of the sector
The CISI has responded to the Treasury’s Financial Advice Market Review, following consultation with a number of individual adviser members.
It disagreed that the FCA should focus initial work on consumers with some money but without significant wealth, which are those with less than £100,000 investable assets or incomes under £50,000. This approach does not take into account the nub of the ‘advice gap’, the CISI stated. It said: “This is caused by advisers’ charges – they are simply too high for consumers with smaller assets. So the focus of the initial work should be on how to reduce these so all can afford them. The cost of good quality advice must be reduced to a level that consumers with smaller assets can afford. There are two main ways in which this can be done. The first is to strongly encourage advisers to use the technology now available to assist them in providing their services; to take out much of the routine tasks in research, product selection, order execution and settlement and trade and transaction reporting – leaving the adviser free to do what he or she is best at: understanding what the client wants and giving advice. There are a host of business services and business models that currently exist for these purposes.”
The CISI also believes there is a need for simplifying the different types of advice described in the FCA’s paper FG15/l. It stated: “While the CISI sympathises with the legal constraints under the Financial Services and Markets Act 2000 on the FCA, it has both confused advisers and discouraged innovation. Competence and qualifications requirements will need to be adapted according to any new classification.”
The CISI told the FAMR panel it would be happy to participate in discussions to develop these and other ideas further.
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