While we are pleased to see the Financial Conduct Authority (FCA) endorse the value of qualifications, we are surprised that the time scale for employees to attain an appropriate qualification has been increased by 18 months from two and a half years to four years. The FCA needs to be careful not to send out mixed messages that may devalue qualifications.
We have long noted that an unintended consequence of the Retail Distribution Review is the creation of an advice gap and that good quality comprehensive financial advice costs money. However, financial advice comes at a premium because regulatory costs are high as advisers remain at risk from retrospective regulatory reviews with the benefit of hindsight.
Financial advice and planning costs to the consumer are expensive, not because advisers are trying to maximise their profits, but because the regulatory cost and risks are too high.
Therefore we applaud the FCA’s initiative to embrace technology and auto-advice models, which will have a role, but they are unlikely to replace dealing with a real person who can fully understand and empathise with clients’ needs, although we would also urge the regulator to consider reducing the regulatory burden in this specific area.
On accessibility, we welcome the recommendation that consumers should be able to access a small part of their pension pot before normal pension age to redeem against cost of pre-retirement advice.