Simplified advice should not be restricted to those who have cleared their debts and had other ‘priority needs' met if the Financial Conduct Authority (FCA) is serious about closing the advice gap, according to a law firm.
Current regulatory guidance on simplified advice says it will not be suitable for those who may need to reduce existing debts, as that should take precedence.
But Pinsent Masons partner Bruno Geiringer said if somebody has an investment need, "some sort" of advice would be more beneficial than no advice at all.
"People are commonly both investors and savers today, and to exclude people with debts from using a simplified advice model would reduce the size of potential customers likely to be in this segment of the market, and potentially increase the inaccessibility of people with simple needs and means to advice," he said.
Geiringer was writing in a Pinsent Masons white paper examining the content of recent FCA guidance and consultation papers, including on advice 'boundaries'.
He queried what the regulator meant by ‘priority needs'. The regulator has suggested people would need to first reduce debts, have access to some liquid cash and have their core protection needs met before accessing simplified advice.
But Geiringer said: "What is meant by ‘priority needs' anyway? This is likely to mean different things to different people. If it is an important boundary line for when simplified advice can be accessed, then the term ‘priority needs' should be made clear in the rules."
Simplified advice is not a defined term in the FCA Handbook, but has been adopted to describe ‘streamlined' advice processes which aim to address the straightforward needs of consumers.
Geiringer said it was time the regulator for the term to be "defined and included in the glossary of the FCA Handbook to be clear exactly what it means".
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