PFS: Market needs tiered financial advice
Personal Finance Society chief executive Keith Richards made the suggestion at today’s PFS conference where he revealed the PFS is currently consulting with the Treasury with the aim of helping more consumers gain access to professional advice.
Richards said he reckoned one of the main stumbling blocks to offering simple solutions is the fact that advisers must accept unlimited liability for the advice regardless of the level of service.
He suggested that the liability could be capped over a shorter period of time for simpler forms of advice.
Richards said the concept of having different level of advice with different levels of risk is being discussed with the government.
He said: “Clearly regulation has been cited as one of the key reasons why people wouldn’t want to simplify the advice process because you are carrying unlimited liability forever – it’s all or nothing.
“Why would you want to simplify your process to help people with less complex needs if the regulatory treatment and risk is exactly the same as with a comprehensive full financial review? You will leave no stone unturned so your recommendation is based on all the information you’ve got.
“What we want to see is some form of regulation that caps the liability relevant to the level of service offered, so you can simplify things.
“Consumers understand that when you buy different levels of service from platinum, gold and silver there’s usually lots of ticks in the platinum, fewer in the gold and fewer in the silver, but you expect to pay more for the platinum service.”
Richards said introducing tiered levels of advice is conceivable, adding that people are underestimating the potential impact of the Financial Advice Market Review.
He said: “It’s certainly being discussed. I’d like to think it will happen, but there are a lot of stakeholders in the process.
“The government has been very clear that they are interested in solutions. Every adviser has an opportunity. It’s a unique consultation where the government has been open to suggestions that addresses its objectives.”
With such a system Richards clarified that professional advice would still need to reach a certain standard.
He added: “Consumers should be able to expect a professional standard no matter what level of advice they are receiving, they should know that people are suitably trained and qualified and again that might be to different levels relevant to the service offered.
“Then regulatory treatment and liability should be aligned accordingly, so we may see shorter periods of capped liability for simplified advice services.”