6 July 2022

PIMFA calls on Government and Regulator to widen access to advice to more UK consumers

PIMFA, the trade association for the wealth management, investment services and the personal investment management and financial advice industry, has today (6 July) called on the Government and the Financial Conduct Authority (FCA) to work towards the creation of a simpler advice model that reaches more UK consumers.

Current debates around how UK savers can be supported tend to focus on how the mechanisms to help those who are already invested can be improved. But research consistently shows that those on lower incomes are far less likely to access professional advice because of the cost of doing so, despite the fact that they benefit most from advice in the long term.

PIMFA believes more can be done to help UK savers and provide an element of support for those who are not currently engaged and may have sums of cash that could be made to work harder and offer greater reward but are currently depreciating in a high inflation economy.

PIMFA believes widening access to advice can only be achieved by giving advice firms the ability to sit down and actively engage with consumers to help them overcome some of the basic barriers they have towards investing such as behaviours, perceptions or less exposure/access to financial education.

In a policy paper entitled: “Up on the Ladder” outlining its proposals for a Simplified Advice structure that would benefit a greater number of UK consumers, PIMFA argues that there is a clear disconnect between the number of people who could reasonably invest a portion of their savings and the number that do.

The clear driver of this disconnect is a failure to support consumers in making complex financial decisions as the only options available to them are guidance or full financial advice, as current strict suitability requirements prevent financial advice firms from offering a simple, cost-effective service to UK consumers.

PIMFA is urging the Government and the FCA to consider creating less stringent suitability requirements for clients that have demonstrably simple needs, allowing them to be presented with solutions which suit those needs. PIMFA believes this could be achieved through a Simplified Advice process – a new regulatory requirement as set out in the Handbook – which enables firms and advisers to extract basic information from clients within a restricted set of questions and recommend products and services as a result. 

Outlining a solution, based on a restricted fact find, should not only give consumers confidence to proceed, but also ensure they are placed in a solution which is good for them, not just good enough for most people as is the case with guidance today.

Liz Field, Chief Executive of PIMFA commented: “Ongoing, bespoke financial advice will create the best financial outcome for UK consumers. However, the gap between what is in the absolute best interests of the client and what would almost certainly be better than doing nothing at all, remains far too great and we believe that it should be incumbent on UK policy makers to work towards closing it.

“Creating a simplified advice process which allows firms to diverge from current suitability requirements to support clients in making decisions which will likely be good for them should provide a cost effective and easy to navigate way for firms to provide a simple, tailored solution across a restricted set of simple products and services.

“PIMFA is committed to closing the advice gap in the UK. At present, we believe that the options available to consumers are too binary. It makes sense to us to seek to put another step on the advice ladder to help UK consumers bridge the gap between being guided towards what people like them could do and what it is absolutely in their best interests to do.”

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Notes for Editors

About PIMFA – the Personal Investment Management & Financial Advice Association

  • PIMFA is the trade association for firms that provide wealth management, investment services and the investment and financial advice to everyone from individuals and families to charities, pension funds, trusts and companies.
  • The sector currently looks after £1.65 trillion in private savings and investments and employs over 63,000 people.
  • PIMFA represents both full and associate member firms. Full members provide a range of financial solutions including financial advice, portfolio management, as well as investment and execution services. They assist everyone from individuals and families to charities and pension funds, all the way to trusts and companies.  Associate members provide professional services to the PIMFA community.
  • PIMFA  leads the debate on policy and regulatory recommendations to ensure that the UK remains a global centre of excellence in the wealth management, investment advice and financial planning arena. Our mission is to create an optimal operating environment so that its member firms can focus on delivering the best service to clients, providing responsible stewardship for their long-term savings and investments. 
  • PIMFA has made numerous recommendations to the FCA regarding the Future of Advice, Future of Supervision and the FSCS levy – read more.
  • If you want to read the full Simplified Advice policy paper you acn do so here.
  • PIMFA was created in 2017 as the outcome of a merger between the Association of Professional Financial Advisers (APFA) and the Wealth Management Association (WMA) with a history as a trade association since 1991 – read more.
  • Further information can be found at pimfa.co.uk

Contact

For further information on this release or other press matters please contact:

Matthew West, PIMFA PR Manager – MatthewW@pimfa.co.uk, +44 (0)20 7382 0376 / +44 (0) 7843 903258

Sheena Gillett, PIMFA Communications & PR Director – sheenag@pimfa.co.uk, +44 (0)20 7011 9869 / +44 (0)7979 493225