Regulatory proposals to reform the financial advice regime need to provide a way for mass market customers to get the advice they need, the British Bankers' Association has told the Financial Services Authority.
The aim of the FSA's Retail Distribution Review - to create a market "... which allows more consumers to have their needs and wants addressed" - is in danger of not being met in the coming reforms, BBA chief executive Angela Knight has said in a letter to FSA chief executive Hector Sants.
The main issue is that advice would be put beyond the reach of mass market customers. This risks detracting from a package of otherwise sensible measures.
The BBA proposes that there should also be a "simplified advice" model, which would provide affordable, regulated advice, to fill the gap. The key benefits would be that:
- it would focus on straightforward savings, investment and protection needs more cost-effectively than full advice;
- it would be tailored for smaller transaction sizes than the full advice model; and
- the service would be highly automated and deliver suitable, personal recommendations tof customers with acceptable risks and safeguards - including recourse to the Financial Ombudsman Service.
BBA chief executive Angela Knight said: "We share the FSA's aim of ensuring that consumer protections are in place and that high quality, cost-effective advice is available to people who need it. But we are concerned that advice will be written off as too time-consuming, expensive and complex by the very people who need it most, unless an alternative to full advice emerges.
"We feel that simplified advice will provide the safeguards that consumers need, while delivering effective advice at a reasonable cost."