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FCA offers guidance on the boundary between different investment advice models

Wednesday 16th July 2014

Guidance to support firms which want to provide simplified advice or sales without a recommendation has been published by the Financial Conduct Authority (FCA) this month. 
The guidance has been issued following ongoing FCA policy work and the output from a thematic review into the growth of new advice models, including simplified advice. 
“We want to ensure we have innovation in the advisory market and new, lower-cost options available. Today, we’re aiming to address some of the barriers that firms have identified to offering new, streamlined advisory products,” said Christopher Woolard, director of policy, risk and research at the FCA.
“We believe that a healthy retail investment market is one in which there are a number of different distribution models to suit a broad range of investors. We want to give firms the confidence to innovate to achieve that,” he added.
In particular, the FCA has provided further help for firms interested in offering an automated advice service by clarifying when a personal recommendation is given and shared examples to illustrate the point. In addition, the document provides guidance on the boundaries between a range of investment sales models and advice issued through different media, including social media. The publication pulls together and replaces previous guidance.  
The thematic review that helped inform the guidance consultation has also been published. The report looks at firms’ attitude to different advice models and describes how firms approached the design of distribution models where customers purchase investments without regulated advice. 
Consumer research was conducted as part of this work, focusing on the motivations and experiences of consumers purchasing investments without a personal recommendation. 
The FCA is also today asking for views on ‘Project Innovate’, which intends to help foster innovation in financial services by giving further support to those firms looking to bring new ideas to the market.  

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