The Financial Services Consumer Panel (FSCP), a U.K.-based investor advocacy group, is calling for automated and traditional financial advice to be regulated the same way and that investors need much better insight into the costs of investing.
“Automated advice should be subject to the same standards as other forms of financial advice,” the FSCP says in response published on Friday to a discussion paper on automation in financial advice that European regulators issued late last year. “Advice is either regulated or it isn’t, and providers should make this clear to customers up front.”
In addition, if advice is not regulated, “there should be a clear warning to consumers,” the FSCP’s response says. “This will bring much-needed clarity to the market, especially giving rapid growth in the provision of automated advice services.”
Separately, the FSCP has also issued a call for standardized reporting in the pension industry to make the costs of investing more transparent in a discussion paper released on Friday.
The discussion paper indicates that although costs have a significant impact on fund assets, and ultimately retirement income, “the full extent of these costs is simply not known.”
To address the issue, the FSCP proposes that regulators and the pensions industry get together to develop a new standard for collecting cost data and reporting underlying asset management and other operational costs in order to improve the transparency of pension funds.
“The problems of cost opacity and conflicts of interest in asset management are well known and long-standing. We are always being told there is a solution just round the corner,” notes Sue Lewis, chairwoman of the FSCP, in a statement. “While the direction of travel is welcome, millions of pension savers are still losing out year after year by paying too much in unseen costs and charges. We are recommending a small step that could be implemented quickly and make a big difference to tomorrow’s pensioners, without prejudicing more far reaching change to come.”