FCA consults on simplified advice regime

FCA is consulting on a proposed simplified advice regime, which will allow firms more easily to give consumers advice about certain mainstream investments within stocks and shares ISAs.  It proposes, as part of its consumer investment strategy, to:

  • streamline the customer fact find to make advice more straightforward
  • limit the range of investments to make advice easier to give and understand
  • make qualifications more proportionate to make costs savings for firms and
  • allow customers to pay advice fees in instalments.

FCA notes that its existing requirements for “holistic” financial advice will continue to apply in some areas, but also notes that in others it will be adding, amending or removing requirements – and of course the regime will also be subject to the Consumer Duty.

In principle:

  • PROD will continue to apply to the scope of service, service design and filtering, and there will be new service disclosure rules in COBS, with a new definition of “core investment advice”;
  • COBS 9A and the guidance on streamlined advice will continue to apply, but there will be additional new guidance;
  • TC will be amended to reduce required qualification levels for core investment advice only;
  • on product governance, PROD will apply and there will be limitations on the range of investments that can be recommended, so that RMMIs and NMMIs are excluded;
  • fees rules in COBS 6 will apply but there will be a new rule to allow payment in instalments;
  • for marketing and disclosures, COBS 6 and 9A will apply as will PROD 3 as relevant, but there will also be new guidance in PERG and in those chapters of COBS relating to core investment advice;
  • firms will still require “advising on investments” permission, and will have specifically to notify FCA if wishing to undertake core investment advice. There will also be new record keeping requirements specific to core investment advice;
  • the SMCR (and, as appropriate APR) will apply

FCA asks for comments by 28 February 2023.

Emma Radmore