New Financial Services Bill must provide impetus for advice/guidance boundary review

Tom Selby
10 May 2022
  • A new Financial Services and Markets Bill focused on strengthening the financial services industry, has been confirmed in the Queen’s Speech today (New law to protect access to cash announced in Queen's speech - GOV.UK (
  • The Government is being urged to use the Bill as a catalyst to formally address concerns over the advice/guidance boundary
  • The FCA’s ‘Consumer Duty’ reforms will require firms to act to achieve good outcomes for customers – but its impact will be limited if confusion around where guidance ends and advice begins persists
  • Solvency II reform will be trumpeted as a Brexit dividend for the UK

Tom Selby, head of retirement policy at AJ Bell, comments:

“The introduction of the Consumer Duty has the potential to transform UK financial services for the better.

“By moving from rules-based to outcomes-based regulation, firms should be able to focus more on introducing interventions and prompts that help customers make better financial decisions.

“However, the effectiveness of this regulatory shift risks being undermined by the lack of clarity over the advice/guidance boundary.

“This lack of clarity means firms who do not wish to offer advice tend to steer well clear of anything that brings them close to the regulatory perimeter.

“As a result, millions of non-advised customers are receiving less support than might otherwise be the case, meaning they are more at risk of making poor saving or retirement decisions.

“The new Financial Services Bill provides a legislative platform to rethink that paradigm. Addressing this issue would fit neatly into the Government’s flagship ‘levelling-up’ agenda, as it is those on lower incomes who cannot afford advice who most benefit from guidance.

“If guidance could be beefed up, non-advised savers would be in a better position to achieve their long-term goals.”

Solvency II and wider regulation

“Confirmation Solvency II will be reformed will undoubtedly be trumpeted as a Brexit dividend for the UK, with the implication being that insurers will be subject to less stringent regulatory requirements – in particular in relation to the capital they have to hold in reserve.

“This could be good news for customers if lower regulatory costs are passed on in lower charges or better rates.

“However, the obvious counter to that is if consumer protections are lowered then there could be a greater risk of detriment should a firm run into difficulties down the road. There is also, of course, the possibility benefits will be swallowed up in higher profits or shareholder dividends.

“Alongside this, the Government wants to require regulators to focus on both growth and international competitiveness when policing UK firms.

“The key here is ensuring balance, protecting consumers from bad actors while not standing in the way of firms trying to innovate for the benefit of savers and investors.”

Tom Selby
Head of Retirement Policy

Tom Selby is a multi-award-winning former financial journalist, specialising in pensions and retirement issues. He spent almost six years at a leading adviser trade magazine, initially as Pensions Reporter before becoming Head of News in 2014. Tom joined AJ Bell as Senior Analyst in April 2016. He has a degree in Economics from Newcastle University.

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