In December 2022, the Chancellor of the Exchequer introduced the Edinburgh Reforms, setting out a package of reforms to the financial services industry. Alongside other welcome reforms, HM Treasury (HMT) committed to working with the Financial conduct authority (FCA) to examine the boundary between regulated financial advice and financial guidance. A Discussion Paper was subsequently published in December 2023.

We believe that the outcome of the review needs to give due consideration both to the improvement of what is available by way of guidance or ‘targeted support’, as well as ensuring that the cliff edge between guidance and advice can be smoothed.

Any new guidance regime should be able to take due consideration of an individual’s personal characteristics to signpost them towards solutions which broadly meet the needs of people like them. This should not explicitly or implicitly be considered a personal recommendation. More broadly, we believe that any new regime should empower financial services firms to proactively engage when consumers are engaging in activity which is clearly harmful, allowing them to meet their obligations under the new Consumer Duty.

We also believe in smoothing the cliff edge between guidance and advice through the provision of a rules-based simplified advice regime which would enable firms to provide narrower-scope advice for consumers with demonstrably simple needs. In the context of encouraging potential investors to make investing decisions, it remains the case that the well discussed behavioural barriers which prevent savers from becoming investors are best overcome through some form of personal recommendation rather than simply providing better targeted information.