advisor with client

The number of investors receiving advice in the U.K. — and their satisfaction with that advice — has increased since major reforms to the country’s financial advice market were adopted, finds a new review from the U.K.’s Financial Conduct Authority (FCA).

The FCA published a report detailing the results of its evaluation of the impact of its two major recent reform initiatives: the Retail Distribution Review in 2012, which banned commissions and raised advisor proficiency standards, and the follow-up Financial Advice Market Review (FAMR) of 2015.

“The evaluation found evidence of some improvements in the market since the conclusion of FAMR,” the FCA said.

In particular, the FCA’s review found that the number of adults who have received financial advice rose from 3.1 million in 2017 to 4.1 million in 2020.

The review also said that 56% of consumers reported being satisfied with the advice they had received, up from 48% in 2017.

The number of advisors rose by about 4% from 35,000 in 2012 to 36,400 in 2019.

Additionally, the report said that the use of automated advice models has ramped up, with estimated assets in automated advice services rising from £0.4 billion in 2016 to £3.2 billion in 2019.

But the review also found that there’s still work to be done. For instance, many consumers are holding money in cash that could be invested for potentially higher returns, but that they have not received the help required to make better investment decisions.

From the industry side, the review found more scope for innovation and competition. It noted that there’s a “significant clustering around certain service types and price points.”

“More tailored guidance services and simpler advice services could help to attract more consumers towards the help they need,” the FCA said.

“Our evaluation has found the advice and guidance market is moving in the right direction, but still has further to go,” said Sheldon Mills, interim executive director of strategy and competition at the FCA.

The FCA said that the results of its review, along with the feedback it receives to its ongoing consultation on consumer investments (which closes on Dec. 15), will inform any future regulatory action.

“We will use the evidence base this evaluation has given us, along with the responses to our call for input on consumer investments, to shape our work to improve the market,” said Mills.

The FCA noted that it plans to carry out this work in the first half of 2021.