FAMR

Notwithstanding the RDR reforms, the FAMR noted several major challenges for the UK's financial advice industry.

Following the FAMR's report, a Financial Advice Working Group (FAWG) was established to examine ways of implementing the FAMR's recommendations.

The FAMR Report noted a widely-held consensus that the 'basic advice' regime, which as IC explained, allows firms to focus on specific needs of clients without the need to undertake a comprehensive overview of their overall financial circumstances, had not been widely utilised by financial advisors.

Another issue of concern identified by the FAMR was the lack of regulatory and industry consensus about financial 'rules of thumb' (for example, that consumers can afford to take more financial risk at young ages, and less at old ages), and 'nudges' (that is, prompts for consumers to evaluate their financial circumstances--such as 'when starting a family, consider whether you could cope financially if your income stopped because of illness or accident, or whether you could benefit from taking out income protection').