March 17 – Advice changes on the fringe

The government has recently announced two changes to advice as part of the Financial Advice Market Review. While these will predominantly affect the investments and pensions arena, they should positively impact the conversations that mortgage advisers can have with their customers.

The first change is the narrowing of the definition of investment advice for regulated firms next year. It will instead be based on the MiFID definition of a personal recommendation. The aim is to reduce the risk of firms straying into providing regulated advice without the correct permission. It will mean that mortgage intermediaries should be able to have wider conversations with customers on other financial products and services without needing to hold the permission to advise on investments (as long as personal recommendations are not made).

The second is the introduction of a pensions advice allowance. From April individuals of any age will be able to withdraw a tax-free payment of up to £500 from a pension pot to pay for pensions or retirement advice. The government has clarified that retirement advice includes a consideration of other factors, including other assets, which are relevant to an individual’s retirement planning. It will therefore cover advice on supplementing an individual’s retirement income by releasing equity from their home. It will be helpful for advisers to be aware of this allowance, again as part of any wider discussions with customers.

Aileen Lees
Senior Policy Adviser
March 2017