Eighty-four per cent of financial advisers believe the FCA’s proposals to ban contingent charging will reduce access to advice, according to new research published by Aegon.
The figure has risen from the previous year when 67% of advisers agreed a ban would lead to a reduction in access to advice.
Aegon’s Retirement Advice in the UK report, which is based on research amongst 227 financial advisers, explored adviser attitudes towards future changes suggested by the FCA, which included proposals to ban contingent charging and introduce a short form of ‘abridge advice.’
The report suggested this would allow advisers to offer a new cost-effective service to quickly identify which individuals should not be considering a transfer. The final rules following this consultation are expected in the first quarter of 2020.
Aegon pensions director, Steven Cameron, commented: “No matter how well intentioned these interventions are, advisers remain concerned over some of the measures, particularly as they carry the risk of dramatically reducing the supply of advice. We would encourage the FCA to take on board the concerns of advisers ahead of finalising their next set of rules.
“What is clear is the overwhelming majority of advisers feel a ban will reduce access to advice. The issue is that some individuals aren’t able to pay upfront for advice and without the option of contingent charging, won’t seek it. Advisers also need more detail on how the ‘carve-outs’ from the ban will work. The FCA needs to frame these in a way that makes them sufficiently objective for advisers to use with confidence, without being unduly prescriptive.”
The report also indicated the FCA’s proposed introduction of abridged advice had been met with ‘mixed response.’ Just 19% of advisers disagreed that it would be effective in identifying clients unsuitable for a transfer – while 46% of advisers said they agreed that it would be effective with a further 35% indicating they were not sure.
“The proposed introduction of ‘abridged advice’ receives a tentative welcome from advisers with the potential to allow advisers to cost-effectively ‘filter out’ DB members not suited to transferring,” Cameron added. “However, advisers remain hesitant that this new service with full fact find will save sufficient time and hence money to appeal to customers.”
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