Financial industry association, PIMFA, shares its views on Financial Conduct Authority's consultation focused on providing tailored assistance to businesses facing financial troubles.
PIMFA Urges FCA to Clarify Targeted Support Regime
The trade association for wealth managers and financial advisers in the UK, PIMFA, has issued a response to the Financial Conduct Authority's (FCA) latest consultation on Targeted Support, a new regime aimed at bridging the support gap in the UK.
According to the response, PIMFA supports the FCA's proposals for Targeted Support, which are believed to be most significant for consumers making retirement decisions. However, the association calls for clarity in key areas to ensure it delivers on its aims and avoids consumer confusion.
Consumers should understand that suggestions in the targeted support regime are options, not instructions, in targeted support. PIMFA believes that targeted support should help consumers understand what they could do in certain situations, rather than tell them what they should.
Simon Harrington, Head of Public Affairs at PIMFA, believes that the targeted support regime, combined with simplified advice and holistic financial planning, can create a continuum of support that helps consumers at every stage of their financial lives. He goes on to say that Targeted Support has the potential to be one of the most important reforms in a generation.
PIMFA also supports the use of general annuities within a framework of goal-based advice, emphasizing suitability and clarity for clients in achieving their retirement objectives. However, the association opposes the FCA's proposed two-week delay between suggestion and purchase of specific annuities.
In addition, PIMFA calls for greater transparency by asking firms to disclose the assumptions underpinning consumer segmentation and suggestions. The association also supports limiting targeted support to pensions and ISAs, but opposes inclusion of General Investment Accounts and high-risk products.
PIMFA supports FSCS protection for targeted support and urges the FCA to allow Appointed Representatives (ARs) in consumer investment and retirement markets to deliver targeted support. The association believes that a free model could create unintended commercial incentives for firms and favor firms which operate vertically integrated models.
Simplified advice remains an option the FCA should consider for consumers who want more assertive direction. PIMFA supports the use of "better outcomes" rather than "better position" in the rules, but calls for clearer wording.
The impact of Targeted Support is believed to be most significant for consumers making retirement decisions. The distinction between targeted support and regulated advice must be made clear to consumers.
It is worth noting that there is a support gap in the UK, with 25 million people never having received professional advice or guidance. PIMFA urges the FCA to produce guidance for firms on data collection and consumer segmentation to help bridge this gap.
In conclusion, PIMFA strongly supports the FCA's proposals for Targeted Support and believes that it has the potential to significantly improve the financial lives of millions of people in the UK. However, the association calls for greater clarity in key areas to ensure that consumers understand the options available to them and that the regime delivers on its aims without creating unintended consequences.
