Published today (8 December), one of the proposals is further clarifying when firms can give consumers support without giving regulated financial advice.
The ‘further clarifying the boundary' proposal intends to explore whether further guidance or simplifying existing guidance would help firms provide consumers with greater levels of support by giving them more confidence to operate closer to the boundary.
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Another is the ‘targeted support' proposal, allowing firms to provide support tailored to groups of people in similar circumstances and enable firms to broaden the support they can provide to consumers.
This could be offered without explicit charges, based on limited information, and would enable firms to suggest products or courses of action based on a target market the consumer has been identified as belonging to, rather than fully individualised support.
Finally, in its ‘simplified advice' proposal, the regulator has set a new form of simplified advice that makes it easier for firms to provide affordable personal recommendations to those with simpler needs and smaller sums to invest.
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The FCA said today's advice/guidance boundary proposals are "an important step in examining how innovation could expand the market to new forms of advice and support, driving competition to better serve consumers, while maintaining consumer protections".
It added: "Following close engagement with stakeholders to shape these initial proposals, the FCA and government will continue to work side by side with industry and consumer groups. The aim is to open the market to a wider range of advice and support, while supporting the UK investments market to thrive."
The FCA noted that the proposals were high-level at this stage, not definitive and reflected early thinking. The regulator said they would evolve based on stakeholder feedback and further engagement.
The watchdog also said it wanted to discuss the defining features of the proposals and how each would meet consumer needs and firms' ability to deliver services under each proposal, including taking advantage of the opportunity provided by new technologies.
The FCA added that it was also interested in whether there are any other proposals that would help to close the advice gap.
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Economic secretary to HM Treasury Bim Afolami said: "The gap between holistic financial advice that is unaffordable for many, and guidance that is free to access but not personal to the consumer, is simply too vast.
"This so-called ‘advice gap' is excluding people with modest investments, who are looking for support that does not break the bank.
"This just is not good enough - we have long needed a middle ground that is affordable and accessible. The policy paper that the government and the FCA have published today will explore how we can achieve exactly that."
FCA executive director of markets and international Sarah Pritchard added: "We want to open the door for more people to get the right advice or support to manage their money at the time they need it and at a cost they can afford. We have already helped firms test drive innovative solutions but we want to go further.
"This review will help us produce new rules to deliver this important step change for industry and consumers. It's important we get this right and we welcome feedback on whether the proposals are right for consumers and for businesses."
Industry welcomes the review
The latest advice/guidance boundary review has been welcomed by the industry.
Nucleus Technical Services director Andrew Tully said: "Planning is a key part of how confident someone is about their financial prospects in retirement. Giving more people the chance to access the support they need to make their money work harder is a step in the right direction.
"We are big supporters of advice and know just how much it can help people achieve good outcomes. The proposals from the FCA and government could encourage millions more to save for their future and as their needs become more complex create further opportunities for advisers."
Royal London director of policy Jamie Jenkins said this was a "step-change" from the regulator in trying to tackle the advice gap.
She said: "For those who receive professional advice, the benefits are clear, but the journey to that point is built around a framework that is so risk averse that very few people are receiving any meaningful guidance along the way. This is a welcome intervention to attempt to change that."
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Sharing a similar view, Wealth Wizards chief executive Ben Hampton said this "feels different" to previous attempts to "solve this puzzle".
He said: "The FCA and Treasury are breaking new ground with a policy paper, signalling a shift for quicker, more impactful feedback, rather than a traditional discussion paper route. The pace of change feels progressive, as an industry we all need to step up to accelerate better access to financial help.
"This is the start of new era of how people make financial decisions. We will need to digest the detail however the ability to be more personalised and opinionated outside of regulated financial advice will reshape customer behaviour. The real winners are going to be those who can coherently connect the new and different types of support that will become available."
KPMG regulatory insight centre director Philip Deeks said these "bold proposals" were exactly what was needed to help customers receive good outcomes.
He added: "It is also an important step and will help many firms fully embed their obligations under the Consumer Duty.
"These proposals create a new simpler investment advice regime coupled with the more holistic restructuring of the advice guidance boundary to create a new ‘targeted support' capability. There is also much welcomed additional clarity around how firms can nudge and guide customers to make informed decisions without overstepping into advice."
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However, Deeks said that whilst a promising start, "the FCA will need to ensure that there is certainty so firms can provide solutions that generate good outcomes for consumers and have an explicit understanding of how the regulator (and ombudsman) will view them".
Personal Investment Management & Financial Advice Association (PIMFA) head of public affairs Simon Harrington said: "It is vital that firms feel empowered to provide support without the concern of being seen to provide financial advice and we are hopeful that this will manifest itself in a manner that consumers derive value and meaning from being told what people like them would do in similar circumstances."
Harrington noted that for these proposals to be successful, "they have to be commercially viable for firms as well as ensuring that consumers are guided towards good outcomes for them, rather than the firm guiding them."
He added, that PIMFA will continue to work closely with both parties on this review.