Life and pensions giant Aviva is directly lobbying the regulator about its concerns over the boundary between regulated advice and guidance, New Model Adviser® can reveal.
Last week, the Association of British Insurers (ABI), of which Aviva is a member, called for a substantial shake up of the advice market, including risk warnings for pension transfers, and changes to the difference between guidance and advice.
Aviva was one of the central voices in that lobbying effort, but it has also been directly lobbying the FCA about its concerns.
‘We are lobbying and very keen to look at where the advice boundary goes in the future in order to ensure that it’s most appropriate to help our customers and help society as a whole,’ Aviva’s UK savings and retirement chief executive Lindsey Rix (pictured), said.
‘You’re right, we have been very vocal, so [we’re] working with the ABI, working with Tisa and actually working ourselves with government and the regulator, we are looking to make sure that our regulation is set up in a way that is most appropriate to help good customer outcomes, to help customer needs when they want it, and to look at what potential changes could be made to the regulations that would help customers and tweak the pension freedoms, where we see some stress on where the boundary currently is.’
Asked whether the current rules were a frustration, Rix said they were.
‘We want to be able to provide our customers with help and there are currently places where currently we can’t where we’d like to do a bit more.’
In a 2017 paper on the topic prepared for the regulator and the Treasury, the Financial Advice Working Group defined guidance as ‘an impartial service that will help you to identify your options and narrow down your choices but will not tell you what to do or which product to buy; the decision is yours.’
‘Advice will recommend a specific product or course of action for you to take given your circumstances and financial goals,’ it said.
‘[This will] be provided by a qualified and regulated individual or online by a regulated organisation.’
However, some commentators are sceptical of provider efforts to push for more freedom in their guidance remit, citing concerns about historical mis-selling, and the potential for conflicts of interest.
‘I still think fundamentally if you are a product provider and the only way you receive any remuneration is if people buy your stuff, there’s always that potential for conflicts of interest,’ Lang Cat director of Consulting Mike Barrett (pictured above) said. ‘And there’s always going to be a grey line where [they ask] “is this person going to be buying my thing, or should they be doing something else?”
‘That something else could be paying off debt or making cash savings, or contributing to an employer pension scheme. If you start to guide people into stuff, you risk unsuitable outcomes.’
Barrett did agree that improving the defining line between guidance and advice ‘is a debate that needs to happen.’
‘People make decisions in very different ways these days. Online decision making tends to be a lot about validating choices and using unofficial information from blogs or internet forums and newspapers.
‘The official disclosure [of guidance] that providers put out will be in the mix of that, but the question of where that sits in terms of what triggers the [customer’s] decision is a really important thing to be discussing.’
Restricted guidance? Restricted advice
The company says that it currently has around 100 advisers. But the way that such services are communicated to members of the public is also a key consideration, Barrett said.
‘I’ve always thought the biggest problem with restricted advice was the word “restricted”, it has a lot of negative connotations attached to it,’ he said.
‘Actually it’s a lot clearer if you’re saying to somebody: “we can only advise you on your pensions or your ISAs” or whatever it is, “and within that world this is what we believe [will serve you best]”.
‘For businesses like Aviva there is also a brand expectation that consumers have of large companies, where they expect those brands to be doing the right thing by them.’