The Financial Conduct Authority's (FCA) guidance on streamlined advice shows the regulator is engaged with those offering the service, Distribution Technology chief executive Ben Goss has said.
Goss said he was impressed with the "very clear and helpful statement" from the regulator about streamlined advice and felt this was a clear sign the FCA wanted to encourage the use of simplified processes by financial advisers.
"[The FCA provided] a very helpful assessment of what good practice looks like and what bad practice looks like", Goss said, "it will be very helpful for firms considering automation as part of their business, it will act as a very good checklist for firms and says ‘look, these are the things you need to think about.'"
On 11 April, the FCA published its first progress report on its joint work with the Treasury, the Financial Advice Market Review (FAMR).
In a supplementary guidance consultation on streamlined advice, the FCA clarified firms wanting to offer the service had to abide by the same rules as any other investment adviser. They had to be careful to obtain and understand "all the essential facts" to make sure they are able to provide a suitable recommendation to clients.
However, the FCA made clear those services might not have to provide an analysis of all of a client's circumstances if they had already ruled out a particular area such as pensions.
It also highlighted that some products may not be suitable for the simplified process, such as highly complex, illiquid or concentrated products.
Signal of support
Goss said the regulator appeared to be encouraging firms to adopt an automated streamlined process as a way to fill the advice gap - the main aim of FAMR.
He said: "If you can automate advice, it's a great opportunity. You can start a new relationship with a smaller client; and today's smaller clients are tomorrow's wealthy clients. That's good for the client, and the adviser, and the firm.
"The paper sends a signal that the FCA is very much engaged with wanting to support firms that want to adopt streamlined processes."
In late February, Dynamic Planner launched AccessAdvice, an automated advice service for advisers that asks clients a series of questions ranging from suitability, investor experience, objectives to risk profiling and capacity for loss before offering potential products.
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