Britain’s financial regulator wishes to make available “robo” financial services in the UK, which is a computerized monetary counselling and advice, a standard practice in the U.S that will be most helpful for clients who have less disposable income to invest in profession financial advice or wealth management.
The British Finance Ministry and the Financial Conduct Authority (FCA) stated on Monday that it was essential for authorities to regulate costs pertaining to financial advice and make such services more accessible.
The finance authorities also said, while notifying the public about their plans to bring more changes to the market relevant to financial advice, a similar protection level would be applied to the “robo” services as one-on-one guidance and the option would definitely be a more affordable and easily accessed service for consumers. They also highlighted that the introduction would enhance the growth of changes within the “fintech” field.
The review involved is commonly referred to as a FAMR, a financial advice market review, and to make such a service easily available to consumers the government has been asked to approve access to a minor amount of consumers pensions in order to seek pre-retirement advice 5-10 years in advance of their tenure of service.
There are at least 5 million in Britain who are stuck in the “advice-gap”, according to Deloitte, either with or without a capacity to acquire advice via payment. There are one million people, minimum, who are entitled to receive their primary financial needs and “robo” advice could offer this.
The accountancy firm also stated that “robo” advisers hold less than a billion pounds of assets in Britain, as compared to the $19 billion in the U.S.
The FCA said that they will assist in establishing units to assist companies in introducing automated or “robo” advice units.
Banks which have withdrawn from offering financial advice, since the PPI scandals, are now seeking to make a re-entry into the market opting for robotic service assistance.
Richard Freeman, chief distribution officer at Old Mutual Wealth, appreciated the programme that will allow consumers advanced access to their pension funds and get advice:
“Allowing consumers to access part of their pension pot early in order to fund the cost of advice is a bold proposal.”
The goal of the FCA’s introduction of different innovative systems is to have a double-tier market – while “advice” based on investments will be guided by regulation and general “guidance” will be only slightly regularised for lack of the inquisitive approach towards customers.
Freeman added to this:
“Defining advice as a personal recommendation would be a positive step, giving (advisory) firms more clarity and creating a line in the sand between advice and guidance.”
British junior finance minister, Harriett Baldwin stated that the programme is all set for a comprehensive arrangement in order to access high-class services and a cost-effective advice.
Since only a minority group had requested for a review, the FCA said it would refrain from re-establishing commission for financial advice.