She adds: “It would be interesting if self-directed investment platforms were to create an investment profile where at a certain point of risk or level of investment there was a call to action to receive full planning advice. That would demonstrate a significant willingness to prevent investment harm.”
Reducing investment fraud is also on the FCA’s priority list. According to the City watchdog, consumers lost nearly £570m to investment scams either undertaken or helped along by regulated companies in 2020-21. Another target is to "stabilise" the £833m compensation bill for the FSCS and aim for a year-on-year reduction in some funding classes, from 2025.
However, there is some adviser scepticism around this, as Carl Lamb, executive director at Smith and Pinching, says: “I will believe the reduction in levies when I actually see it. For the last number of years, it has just gone up.”
To-do list
There is a list of tasks to be ticked off to achieve these goals. The FCA will be looking into regulatory changes that would make it easier for companies to provide more help to people who are looking to invest in mainstream products.
It also recognises that educating consumers will play a big part in the goal of helping them avoid investment harm. This will take the form of an £11m PR campaign to help people make better-informed decisions and stay away from risky investments.
Lamb agrees better understanding is a priority: “The key to all of this is client education on an ongoing basis. Unfortunately, there will always be scammers and rogues out there, so we all must work together for the greater good of the clients involved.”
The FCA acknowledges that it has more work to do in preventing scams, saying that it aims to become more "agile" in how it detects, disrupts and takes action against fraudsters.
In addition, it wants to strengthen the appointed representatives regime, with a consultation planned for later this year. While the regulator did not go into detail on this subject, it highlighted in its business plan that it wants principals and ARs that are competent, financially stable and who ensure fair outcomes for consumers.”
Michael Couzens, chief executive of network business Adviser Services, says: “It makes sense for the FCA to look at networks and other ARs and what they can do better. But with any changing regulations, you need to be clear about what you want people to achieve. The FCA doesn’t talk to firms like ours enough.”
The FCA’s plan also includes tightening up its financial promotions regime, including the classification of high-risk investments, further segmenting the high-risk market and strengthening the requirements on companies when they approve financial promotions. It will also review the compensation framework, particularly in cases where businesses go under, leaving liabilities for the FSCS to deal with.
