Banks call for clearer advice & risk based regulation

Customers looking to invest will get clearer and more focused advice and information if proposals from the British Bankers' Association are adopted by the Financial Services Authority.

The BBA said today it was pleased the majority of its suggestions had already been included in the FSA's discussion paper on the distribution of retail banking services. Key recommendations from the BBA included a clearer break-down of advisory services targeting particular groups and a more risk-based regulatory framework for financial advisers.

The BBA considers the following as essential outcomes for the review:

Greater clarity for retail consumers through a clearly segmented advice market for retail investment;

Revisions to the basic advice regime to help customers on lower and middle incomes to buy low risk investment products;

Greater transparency in the costs of distributing retail products and the provision of advice;

More risk-based regulatory capital requirements for the IFA sector with incentives for intermediaries to hold more capital;

Improved consumer access to financial advice and products and raised standards of industry professionalism;

Refined conditions for the use of the term ‘independent’ by financial advisers as an incentive to raise standards;

Removal of regulatory retrospection, especially in relation to the role of the Financial Ombudsman Service;

Angela Knight CBE, chief executive of the BBA said: "The FSA's discussion paper offers the opportunity to provide people – particularly those on lower incomes - with a clear, safe and reliable way of investing for their future. Banks are well positioned to deliver this service and we look forward to playing our part. The FSA has successfully identified the key issues for debate and has provided some credible solutions for consideration. It’s important that the FSA maintains the momentum in this to ensure that real change is delivered to the benefit of consumers and industry alike."