The Financial Services Authority unveiled its final regulations for its proposed new “basic advice” regime, which aims to provide a way for consumers to receive simple, low-cost advice on a limited menu of financial products.

As envisioned by the U.K. regulator, the “basic advice” sales process will be centred around a series of pre-scripted questions to check whether a stakeholder product is suitable for a customer. A recommendation will then be made based on the consumer’s attitude to savings and risk and current financial position. Firms will be able to sell stakeholder products under the new regime from April 2005.

The FSA says that this simpler sales process can be much easier and faster than the current “full” advice regime which advisers must use when giving recommendations to consumers on other investment products.

The regulatory measures were finalized after consultation with consumer bodies, industry and trade associations, on the detailed rules governing the sales process, including the structure of advice interviews. During the consultation launched in June this year, the FSA conducted further consumer testing to check that the process was effective and protected consumers properly. The results of that research are also published today.

Dan Waters, director of retail policy at the FSA, said, “We fully support the aim of making it easier for all consumers to have access to the stakeholder products. After considerable research we have developed a lower-cost form of advice that will enable authorized firms to sell the government’s stakeholder products simply and quickly to consumers, while at the same time making sure they are properly protected.”


We have taken a conservative and evidence-based approach but one that always puts the consumer first. Not every consumer wants, or can afford, fully-tailored advice on their savings and investment needs. We have created a more ‘off-the-peg’ style of selling that should suit the needs of consumers who are looking for an alternative to full advice,” Waters added.