Standards of professionalism needed to improve, and there needed to be a clearer distinction between the different services being offered to consumers.
More cost-effective ways of delivering investment products and services, and of making advice available to a wider range of consumers needed to be found.
And there was considerable scope to improve consumers’ understanding of the services they received and what they were getting in return for their money.
The FSA, for its part, wanted consumers who were capable and confident, information for consumers that was clear, simple and understandable, soundly-managed firms that were adequately capitalised and treated their customers fairly and risk-based regulation that was principles based. Is any of this sounding at all familiar?
Most of the changes that resulted from the original 2007 consultation were finally implemented in 2012, shortly before the FSA itself was split in two to become the FCA and the PRA.
The key points, which have shaped the industry as we currently know it, were the introduction of ‘independent’ and ‘restricted’ advice, new requirements on adviser charging to reduce potential for conflicts of interest, and higher professional standards for advisers.
For a while, the industry got on with implementing, and it is fair to say the changes resulted in a step change in the way it went about its business.
A new review
But in August 2015 HM Treasury, having expressed concerns that the industry still was not working well for all consumers, launched another review, the FAMR.
Key changes in the landscape that prompted the review included the seismic shift that was the introduction of pensions flexibility in 2015, and concerns that demographics, work patterns and housing markets were changing faster than people could get their heads around without adequate access to financial advice to make sense of it all.
On reflection, although we thought things were complex and fast-moving then, we did not know just what horrors were around the corner in March 2020, but that is probably just as well.
FAMR’s conclusions were that although the RDR brought about a further positive step change in the quality of advice available to those with larger amounts to invest, something needed to be done to make the mass market more cost effective, to improve accessibility and to make changes to the way the consumer redress system worked to address issues around liability.
So there were further recommendations to address the issue of affordability and accessibility of advice (including working with employers).
A post-implementation review of both the RDR and the FAMR in 2020 concluded that the world of advice was changing, albeit slowly.
