FCA Launches Review As Good Financial Advice Gets Scarcer


  • We've said it before – and now's the time, given the just-launched FCA review of the advice market, to say it again.

As stated in the News section earlier, good, independent financial advice has become "more and more precious (and scarce) following the reform of the way financial products are bought and sold – specifically, the way advisers are allowed to remunerate themselves.Many independent financial advisers (IFAs) have simply given up, after a commission-based structure was abandoned in favour of a time-charging scheme. The implementation of the new scheme has been less than smooth, and it's having some unintended consequences – not least of which is a knowledge gap for consumers, who are finding it difficult to obtain good advice on investments."

An article in Financial Planning Today announces that the FCA has launched a review of the advice market, "revealing a number concerns as one of the reasons for the action".Below is an extended excerpt from the piece – with the full text available here.
The regulator has appealed for input from the advice profession as part of the review.
The FCA's official 'call for input' document listed concerns about the way the industry works.
It read: "As set out in our analysis of the investment sector, we have some concerns that, in parts of the market, there may be problems with conflicts of interest, poor treatment of consumers and misleading or confusing communications.
"Consumers can struggle to assess the cost of advice and may overpay for services which they do not need."
The regulator is seeking input on its proposed approach to reviewing the Retail Distribution Review (RDR) and the Financial Advice Market Review (FAMR).
The review will consider whether these initiatives have been successful in achieving their objectives and will look at what consumers want from the market and how the market works to deliver this.
It will also consider how new market trends and developments might affect the future development of advice and guidance services.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA said: "Millions of people look for help and support in making financial decisions every year and the aim of the RDR and FAMR was to help the market develop the right advice or guidance service consumers need to make those decisions.
"Consumers and the market are changing rapidly, as technology, employment patterns and inter-generational challenges change the way consumers interact with financial services.
"As well as looking at how the market has evolved since RDR and FAMR, it's important that our work looks ahead to see how we ensure that this important sector works well in the future.
"We want the market to deliver a range of good quality, affordable advice and guidance services that meet consumer needs."
The FCA is seeking initial feedback by the 3 June.

8% Yield Loans -Latest

  • The latest tranche of the Seascape offering has just been released to market. The offer is for £250,000, with a fixed-rate yield of 8 per cent. The term of the loan of five years. It's 22 per cent subscribed at the time of writing.
  • The £150,000 property-backed loan, North-East Property Investment, has a fixed-rate yield of eight per cent over three years. It's 82 per cent subscribed at the time of writing.
As ever, we've made our best efforts in due diligence and credit analysis before awarding this loan an A rating. However, we cannot warrant that the representations of the borrower are true – though clearly we believe them to be so.
  • Please remember there is always an element of risk, and capital loaned is at risk. See risk warnings at the foot of this article, on our Home page and in FAQs on site.

A Process Guide To Innovative Finance ISA Investment

Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee). That figure is the result of almost £15 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders' capital is at risk. Read warnings on site before committing capital.All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.So here's our guide to the process:
  • Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
  • Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
  • Step 3: Buy loans in the loan market. Once you've put cash in your account it will sit there - and it won't earn interest until you've bought a piece of a loan. It's this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans - all loans on the Money&Co. site can be held in an IFISA - and your money will start earning tax-free interest.
The ISA allowance for 2019/20 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We're assuming a 7 per cent return, net of charges and free of tax here.Once you have made your initial commitment, you might then consider diversifying - buying a spread of loans. To do this, you can go into the "loans for sale" market. All loans bought in this market also qualify for IFISA tax benefits.

Risk: Security, Access, Yield

Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here's one of several earlier articles on security, access and yield.

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Disclaimer: Money&Co.™ is the trading name of Denmark Square Limited, Company Number 08561817, registered in England & Wales, authorised and regulated by the Financial Conduct Authority (FCA). The company is identified on the Financial Services Register under Reference Number 727325. The registered office is 58 Glentham Road, Barnes, London, SW13 9JJ where the register of Directors may be inspected. Denmark Square Limited (ISA manager reference number Z1932) manages the Money&Co. Innovative Finance ISA.