The Financial Services Authority announced today that it will go ahead and implement its so-called “basic advice” regime, which aims to provide a simpler, quicker and lower-cost form of financial advice to consumers.

The U.K. regulator published a consultation paper on the issue in June, proposing a regime define a group of basic products that would be targeted for lower-end investors and sold with very basic advice. The firms that sell these products must be authorised by the FSA, and they must ensure that their salespeople are competent to administer basic advice, but they are not required to hold formal financial planning qualifications.

The FSA envisions that these products would be sold through scripted sales interviews. The regulator will require the process to deliver warnings about the need to address financial priorities, such as debt, and to end if the firm has reason to believe that the customer will not be able to afford any product. The customer will be given a record of the interview and those responses he or she has given on which the advice has relied.

The FSA announced that the new regime will be introduced in April 2005. Dan Waters, FSA Director of Retail Policy, said since it published the paper in June “we have conducted further research on the basic sales approach and the outcome of this gives us confidence that basic advice will allow most stakeholder products to be sold simply and cheaply to consumers in a way that could result in significant benefit to consumers.”

The proposed regime would provide access to “risk-controlled” products, with low charges. Firms must ensure that the products are suitable for the customer’s needs.

However the FSA’s consultation and consumer testing of basic advice has highlighted some concerns regarding one of the proposed products for this basic product list, the so-called Smoothed Investment Fund. Consequently the FSA will not include it in the basic advice regime at this stage.

“The research also showed, however, that while most consumers could understand in simple terms the concept of smoothing, the differences between the smoothed and unsmoothed stakeholder products were harder to get across,” said Waters.

The FSA plans to publish in early November its Policy Statement in response to the consultation it began in June. This will cover the findings of the third wave of research undertaken since then and its overall position on the basic advice process.