Following the Consumer Investments Strategy (CI Strategy) on 15 September 2021, the FCA has published its Consultation Paper on the sector's current level of access to financial advice, with digital tech's role in facilitating the expansion of financial information to mass-market consumers. As mapped within this explainer, digital tech suppliers play an important role in these plans
What is it?
Following the watchdog's recent Financial Lives survey finding 4.2 million people in the UK hold more than 10,000 in cash and are open to investing some of it, during this current Cost of Living period, it's now more important than ever for consumers to have access to important resources in financial advice.
Involving numerous levels of proposed interventions within the standards, protections, and access to financial advice, digital technology, and digitalisation of relevant business operations are included as key factors within the regulator's goals of advice inclusion.
What does it mean for techUK members?
Within the Discussion Paper's varying proposed requirements for financial firms, the application and development of digital technology are mentioned within the following areas -
- Training and competence; Within the guidelines of the RDR, advisers are permitted to undertake 15 hours of CPD per year, involving a range of focuses that seek to maintain sufficient technical capabilities and knowledge. As such, the sector's products and services are becoming more complex with the application of advanced technologies including Distributed Ledger Technology (DLT), AI, and ML.
- This also includes other professional training including conferences and webinars, being held virtually and/or recorded, advisers can use these facilities' flexibility around their role. As such, advisers can educate mass-market consumers on the complex technological mechanics behind the investments they make.
- Authorisations; Under the existing Approved Persons Certification Regime, authorised firms appoint their representatives, of which the FCA approve the advisers firms appoint. The Consultation Paper proposes two central technological transformations of their regulatory operations which would save time/money for the institution;
- (1) A new digital form for firms to complete the notification requirement within electing to undertake the regime. (2) Amendment to Form A - digitalising the process of the FCA approving advisers under the Approved Persons Regime.
Following the proposed operational interventions within firms' adviser appointment, supervision and training processes, the Consultation Paper refers to the FCA's regulatory return data which indicates mass-market consumers often go to automated advice services due to a willingness to pay 1%, or 100 for advice on a 10,000 investment'. This means the technological transformation of firms' adviser processes can reduce costs and time, leading to both higher quality and cheaper services for consumers. Thus, the Paper calls for increased cooperation on this subject between digital technology providers, firms, and financial institutions.
A link to the FCA's paper can be found here.