Financial association PIMFA offers feedback on FCA's proposal for specialized aid in consultation

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. The FCA's proposals aim to address a support gap in the UK, where 25 million people have never received professional advice or guidance.

PIMFA supports the FCA's ambition to close the UK's support gap, but seeks clarity in key areas to ensure the regime delivers on its aims and avoids consumer confusion. Simon Harrington, Head of Public Affairs at PIMFA, believes that these proposals would benefit from more clarity in data collection and the way suggestions are communicated to consumers.

PIMFA opposes the inclusion of General Investment Accounts and high-risk products in targeted support, warning these could undermine policy intent. The gap is most impactful for consumers making retirement decisions. PIMFA supports FSCS protection for targeted support, but urges the FCA to produce guidance for firms on data collection and consumer segmentation, rather than prescribing this, to ensure the regime is reasonably flexible for firms.

Targeted support should help consumers understand what they could do in certain situations, not tell them what they should. The distinction between targeted support and regulated advice must be made clear, with consumers understanding that suggestions are options, not instructions. PIMFA calls for greater transparency by asking firms to disclose the assumptions underpinning consumer segmentation and suggestions.

Simplified advice remains an option the FCA should consider, provided it is accompanied with clear rules, focuses on servicing specific transactions, and is reviewed for qualification requirements. PIMFA supports targeted support being free at the point of use, no additional record-keeping requirements, and a robust but not rushed authorization process. However, it warns that a free model could create unintended commercial incentives for firms.

PIMFA also urges the FCA to allow Appointed Representatives (ARs) in consumer investment and retirement markets to deliver targeted support where appropriate controls and oversight are in place. PIMFA supports the FCA's use of "better outcomes" but calls for clearer wording in the rules to confirm that targeted support should only be provided where it can be expected to deliver a better outcome than doing nothing at all.

In conclusion, PIMFA's response to the FCA's consultation on Targeted Support emphasises the need for clarity, transparency, and flexibility in the implementation of the new regime. The aim is to bridge the support gap while ensuring consumers understand the options available to them and are not misled.