Jamie Jenkins, director of policy, at Royal London gives his views on the ‘CP26/10: Simplifying the pensions and investment advice rules’ consultation, which opened yesterday.
The FCA’s latest consultation on the advice rules fits more squarely in the bracket of ‘completing the picture’ rather than ‘redefining the landscape.’
Put simply, the advice sector works well for those it serves. Research consistently shows that those people who pay for professional advice, in the main, find it to be very valuable. In Royal London’s Meaning of Value 2025 study, 68% of clients rated their advice as good or excellent value for money. But the number of people who do pay for professional advice remains stubbornly low, fewer than 1 in 10.
With such a void between advice and generic guidance, the introduction of ‘Targeted Support’ provides an opportunity to bridge this gap. ‘Simplified advice’ isn’t new, but the detail proposed helps clarify its position in completing the picture, at least from the standpoint of the continuum of services available to consumers.
Advisers will undoubtedly have mixed views on whether there is a place, or indeed demand, for these additional definitions, but any simplification of the rules is likely to be broadly welcomed. And the fact there is no proposed dilution of the qualifications threshold should help to maintain the very high standards associated with professional advice.
Changing the requirements for suitability reviews has received something of a mixed reaction, but it clearly fits with the overall theme of focusing more on the context of a situation rather than boiler plate inputs, under an outcomes-based regulatory approach.
Some advisers have already said they expect to continue with annual reviews, but at least there is greater latitude to focus on what they believe is of most value to their clients, as opposed to the need to conform to more prescriptive, mandatory processes. This may lend itself to greater innovation and diversity of services to suit the specific needs of a segmented client base.
The Regulator is right to reconsider legacy trail commissions, which date back well over a decade now to the pre-RDR era. However, it is also thoughtful to consider any immediate adverse impact on both clients and advice firms. Unintended consequences are by nature rarely foreseeable.
It’s clear that there is demand from consumers for more help now and, while some may feel that AI large language models can partially plug that gap, I doubt many people have the confidence to fully rely on the answers, let alone that they are asking precisely the right questions.
To some extent, the landscape for guidance and advice is being prepared for the increase in demand we are likely to witness many years from now. While few people seek out professional advice now, no-one really knows what this will look like when workplace pensions saving starts to mature. Millions more people will reach retirement with a significant pot of money, wondering how on earth they make it last.
Having a continuum of services for people to access may prove to be precisely the journey we need to allow the professional advice sector to grow when that day arrives.
