Royal London calls for greater clarity for consumers in financial advice market review response
22 December 2015
In its response to the HMT/FCA ‘Financial Advice Market Review’, the UK’s leading mutual provider of pensions and investments, Royal London, has called for a series of reforms to the financial advice market which put consumers first. Key points in the company’s response are:
- A call for clearer disclosure by advisers who have commercial relationships with product providers such as single tie and vertically integrated firms; Royal London believes that impartiality underpins the integrity of advice and that consumers may not be aware of the conflicts of interest within these arrangements; the company specifically recommends a new ‘fiduciary duty’ on advisers to put the consumers’ interests *ahead* of their own;
- The need to reward and encourage advisers who provide high quality and professional advice and put the consumer first; a discount on regulatory levies, similar to a ‘no-claims bonus’ for car drivers, would be a way to reward and incentivise the best advisers;
- To clarify the process by which an independent adviser can agree a focused advice service with their client without fear of future liability in relation to the client’s holistic position. As long as the recommendation to the client remains impartial then this service should still be labelled independent.
- The need for the Government to cease being an ‘armchair observer’ and instead to play an active part in industry discussions about creating a ‘pensions dashboard’ where consumers can see all of their pensions, including state pensions, in one place; this would be of benefit to consumers and could reduce the costs of providing advice;
Royal London believes that seeking help and advice about finances should be a way of life, not a one-off event. But Royal London research has found that even amongst those who are potentially close to pension age or in retirement (those aged 65-75 years old), less than half, (46%) have actually sought some form of advice and the figure falls to a third, (33%) of those in their 30s and only a quarter, (25%) of those aged 18-29.
Commenting on the submission, Royal London’s Director of Policy, Steve Webb said:
“Genuinely independent financial advice is of huge value to consumers, and we need to reduce the costs of providing that advice. Well run advisory firms should receive discounts on the fees they pay to regulators, as they should not have to pay the price of poor practice by others. We also need to make sure that consumers know that the adviser they are dealing with is putting their interests first. Consumers will also benefit if there was a ‘pensions dashboard’ where they could see all their pensions in one place, and this would make it easier and cheaper to provide advice. Since the dashboard needs to include state pension information, it is important that the Government works with the financial services industry to progress this idea rather than simply being an ‘armchair observer’.”
For further information please contact:
Director of Policy
0207 015 2556
Notes to Editors
1) Figures taken from Royal London’s Pensions Through The Ages report.
About Royal London:
Royal London is the largest mutual life, pensions and investment company in the UK, with Group funds under management of £83.1 billion. Group businesses serve around 5.3 million policyholders and employ 2,958 people. (Figures quoted are as at 30 September 2015).
The Group is currently moving all of its UK and Ireland life, pension and investment businesses under a new version of the Royal London brand. The Group's independent wrap platform will remain branded Ascentric.