The Treasury’s latest move to ensure that only regulated firms are able to provide financial advice to clients will enhance investor protection, says the industry’s trade body.
The UK Treasury have committed to bring the UK definition of advice in line with the Markets in Financial Instruments Directive definition’s of advice as a ‘personal recommendation’. According to the Wealth Management Association, who represent 180 firms in the sector, the standardisation of definitions of advice to those outlined in MIFID II will allow firms to mitigate risks and better help consumers.
The changes will also see the Bank of England’s new Prudential Regulation Committee (PRC) take control of the Prudential Regulation Authority’s most important decisions, leaving the BofE better equipped to fulfil its vital role of overseeing monetary policy and financial stability for the whole of the UK.
In a statement, the Treasury said the changes would mean the Bank of England is better equipped to fulfil its vital role of overseeing monetary policy and financial stability for the whole of the UK by strengthening the governance and accountability of the Bank.
WMA Chief Executive Liz Field said: “This is an important decision for the industry and its clients: consumer protection, proportional regulation and clarity are essential tenets and this move enables firms to deliver to individuals and families the best possible financial advice so they can confidently plan for the future.”
Economic Secretary to the Treasury, Simon Kirby, said the integration of the Prudential Regulation Authority with the BofE would “strengthen the governance and accountability of the Bank.”
“A well-regulated financial system is central to a strong economy. Since 2010, we have radically reformed how the UK’s financial services industry is supervised and put the Bank of England back at the heart of the system, where it belongs”, he added.