The “status quo” within financial services must be disrupted to bring advice to more people, according to Harriett Baldwin, chair of the Treasury committee.
Baldwin told Dynamic Planner’s annual conference simplified advice could bring financial services to some of the 92 per cent of people that have not benefited from professional advice.
Baldwin told delegates: “Simplified advice [would be] for consumers with smaller sums or simpler needs at a price which is commercially viable, both for consumers and for advisory firms.
“With the developments of technology in particular and more powerful artificial intelligence tools, innovators will find ways to give consumers more customised, less generic financial advice, something that I would call financial coaching, and that will be viable as a commercial price.
“Whatever we call it, such changes will help my constituents and people across this country by giving them better and more personalised information to make their choices.”
Simplified advice is one proposal in the Financial Conduct Authority’s advice guidance boundary review.
It also includes creating further clarification on when firms can give advice and targeted support which would give firms the ability to use limited information about customers to make suggestions appropriate for people like them.
Baldwin said the “quality and cost” of financial advice in the UK means just the richest 8 per cent of the population have access to it.
When asked whether there was the risk of firms coming into conflict with the Financial Ombudsman Service over the new rules, Baldwin said changes have to be made to bring advice to more people.
She said: “We need to disrupt the status quo in order to be able to help that broader part of the marketplace.
“How much further can we go without interrupting your business in the 8 per cent part of the economy to help more people get financial advice?”
Elsewhere in her speech, Baldwin said current regulation could be preventing advisers from serving potential clients.
She said: “Our world leading financial services sector has many excellent firms serving consumers well, but they're held back by the regulations from offering their consumers any helpful advice from their own expertise.
“They could even contradict the consumer duty requirements, if they can see that their customers are making poor decisions such as leaving long term savings in taxable low interest accounts where they could perhaps have an individual savings account or earn higher interest rates. Some firms would love to make recommendations for that customer but they can't give them that advice.
“Even Martin Lewis, who many people turn to for financial wisdom, has told me he feels he's being held back for recommending certain sensible things because it might be considered to be financial advice.”
Dynamic Planner’s Scaling Success conference took place today (March 5) in London.
tara.o'connor@ft.com
What's your view?
Have your say in the comments section below or email us: ftadviser.newsdesk@ft.com
