TISA, the investing and saving membership organisation, is calling on the FCA to use the review of RDR and FAMR as an opportunity to develop a definition for financial guidance that will enable regulated financial services to provide support to the 47 million people that do not receive advice.

In its submission to the FCA’s Call for Input, TISA not only points to the need for the review to address the lack of definition for financial guidance, but wants the review to consider ways that the combination of MAPS and regulated financial services firms can collectively enhance consumers access to financial guidance and make guidance services more relevant to consumer needs without this constituting advice. The current rules are ambiguous plus limits the degree of personalisation that firms can offer, despite the detriment that this is causing consumers.

Whilst strongly advocating the benefits of financial advice, TISA sees financial guidance as being the free of charge service that will help the mass market make informed decisions.

Charles McCready, TISA Strategic Policy Director, said:

“The advice market provides good access and quality services for fee-paying customers, and with few exceptions, suitable advisory outcomes. The provision of free guidance however suffers from a lack of definition and inhibits the breadth and depth of services that might otherwise be available and beneficial to consumers. We would like to see access to financial guidance for the majority of consumers being made a primary focus for the FCA and that these services provide sufficient support and relevancy to consumers that they can then make an informed financial decision.”

Drawing on the views of its members from across multiple sectors, TISA has identified that while the regulated financial services industry has the capacity and willingness to provide free financial guidance, it is prevented from providing more relevant support to the consumer because anything that constitutes personalisation is regulated advice and requires a fee to be charged. This means that the thousands of branch, call and customer support staff are currently restricted in helping customers make better decisions.

TISA also advocates co-operation between MAPS and regulated financial services firms as a foundation block for the mass market delivery of financial guidance. This will require a consistent definition of guidance and standards that apply to both the public and private services. TISA believes that MAPS is best equipped to take responsibility for defining a financial guidance framework in collaboration with the FCA, making this available to be adopted by regulated financial services firms, using the same terminology and tools, delivered by staff with the same qualifications and accreditations, resulting in consistent consumer outcomes.

Charles McCready added:

“We believe that chronic under-saving is threatening the financial wellbeing of millions of households, is a major cause of social dysfunction and instability and presents a long-term risk to the economy. People fail to save for various reasons, but a significant factor is a lack of confidence and understanding about managing their money. This is a situation that demands reform now and the longer it takes to make the required changes to regulation and build the appropriate supporting infrastructure and services for consumers, the greater the detriment to the general public. This evaluation of RDR and FAMR is therefore crucial in delivering solutions that will bring real benefits for the general public and not just those that receive financial advice.”

TISA’s submission contains five key recommendations:

1. FCA to develop a clear definition and associated regulations for financial guidance and which enables a degree of personalisation without this constituting advice

2. MAPS to develop a guidance framework that sets out customer journeys that help consumers navigate the key options that will satisfy their financial objectives, involving a degree of personalisation to make the guidance relevant to their situation and facilitate the consumer making an informed decision

3. Regulated organisations are permitted to adopt the MAPS guidance framework and offer the guidance framework directly to their own customers

4. MAPS to work with regulated financial services firms to develop a governance structure that will facilitate a robust engagement with industry and which covers all key interactions between MAPS and industry

5. MAPS Board and Executive team to have engagement with financial services on their strategic agenda both in creating the new strategy for the new entity plus as BAU in ongoing operations.

Ends….

Issued on behalf of TISA by Atlas Partners, for further information please contact:

Clara Rees Jones: telephone: 020 7183 7154 or 07523609413, email: clara.reesjones@atlas-partners.co.uk

Email: tisa@atlas-partners.co.uk

Notes for Editors

TISA is a unique, rapidly growing, consumer focused membership organisation. Our ambition is to improve the financial wellbeing of all UK consumers. We work with our members to deliver practical solutions and devise innovative, evidence-based strategic proposals for government, policy makers and regulators that address major consumer issues.

TISA membership is representative of all sectors of the financial services industry. We have over 200-member firms involved in the supply and distribution of savings, investment products and associated services, including the UK’s major investment managers, retail banks, online platforms, insurance companies, pension providers, distributors, building societies, wealth managers, third party administrators, Fintech businesses, financial consultants, financial advisers, industry infrastructure providers and stockbrokers.

Complementing our consumer policy development, TISA has become a major industry delivery organisation for consumer focused, digital industry infrastructure initiatives (TeX/STAR, Digital ID, MiFID II and Open Savings & Investment). This reflects TISA’s commitment to open standards and independent governance.

TISA’s current strategic policy and industry solution developments include making financial guidance more widely available; digitalisation including the development of a Digital ID, developing open standards-based projects that support the growth of Fintech and increase consumer access to financial services while lowering costs for providers; financial education for young people; retirement savings; consumer engagement; the TISA and KPMG Savings Index.

TISA also provides its members with support on a range of operational and technical issues targeted at improving infrastructure and processes, standards of good practice and the interpretation and implementation of new rules and regulations. This work currently includes: MiFID II, CASS, SM&CR and addressing cybercrime.