The Model Office Blog

#RegTech and the definition of advice

[fa icon="calendar"] Feb 28, 2017 11:32:53 AM / by Chris Davies

We have a new duck in town, HMT have now placed their stake in the MiFID advice definition camp and thus we now have a clear and transparent definition when advice is advice and not as the case maybe.

We reviewed the definition of advice conundrum in a previous blog, which showed the need to place careful boundaries around various propositions.

MiFID’s definition of advice as a personal recommendation to the customer allows FCA regulated firms to provide more tailored information and guidance without fear of the regulatory stick and thus free up ‘second line defence’ resources and costs.

To stop the bad boys, HMT has stuck with the wider advice definition under the regulated activities order of ‘advising on investments’ for unregulated firms. This means they cannot provide more detailed and tailored guidance services.

So, has the ugly duckling become a swan? Well the good news is the following benefits are now available for those firms confident enough to spread their newfound advice wings:

  1. Protection is in place to avoid consumers being sold inappropriate products with unregulated firms having to provide factual information
  2. Boundaries are now clear between advice and guidance thus ‘second line of defence’ strategies can be scaled back saving costs
  3. More detailed information can be provided on product and investment strategies
  4. More tailored and advanced guidance services are now available for example offering guidance on ISA or pension top ups or on fund risk profiling
  5. Consumers who cannot afford or access advice can now receive more support, information and guidance from quality professional regulated firms
  6. The new definition extends the reach for firms to access existing or new clients for example new digital services can offer tailored information and guidance

There will still be those who doubt this new duck is truly a swan in disguise, but from my decade experience as a retail investment adviser, if it looks like, is a positioned as and acts like a duck, then customers will have a clear understanding it is a duck.

Our #RegTech platform Model Office’s algorithm provides strategies to improve professional and compliance performance and incorporates the HMT directives.

As the poet James Whitcomb Riley wrote: “When I see a bird that walks like a duck and swims like a duck and quacks like a duck, I call that bird a duck”.

Please click the below icon link to MO's platform and learn more about MO today..

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Topics: Benchmark, compliance, client centric, Financial regulation, Financial business development, fintech, Human resource development, client engagement, regtech, Constructive compliance, Risk management, practice management, FCA, advice, mifid, HMT

Chris Davies

Written by Chris Davies

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