The change follows a recommendation in the Financial Advice Market Review that the government consults on changing the definition of financial advice to give firms the confidence to offer more help to their customers without fear of inadvertently crossing the boundary into regulated advice.

From 3^rd January 2018, the requirements for advising on investments will change and will mean that most regulated firms will be exempt from the need to hold a permission to advice on investments.

This exemption aims to reduce the risks of firms carrying on a regulated actively without the right permission.

What is going to change?

For the bulk of regulated firms which hold a permission other than, or in addition to, a permission to advise on investments or to agree to advise on investments, they will be able to take advantage of the new exemption.

These firms can provide advice on financial products and services without needing to have the permission for providing advice on investments so long as they don’t provide personal recommendations.

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Regulated firms which want to provide a personal recommendation to a client will continue to need permission to provide a personal recommendation.

However, these firms will also be able to provide advice on financial products and services without it being regulated activity if they also have another permission besides advising on investments or agreeing to advise on investments and they do not provide a personal recommendation.

For firms who only hold permissions for advising on investments or agreeing to advise on investments, the current scope of the regulated activities order will still apply.

Finally, those who are unregulated will see no change and will still be unable to provide regulated advice without authorisation.

This is to protect consumers from inappropriate advice provided by unregulated firms and individuals.

The FCA has told all firms that there is no need to take any action now and they will not have to re-apply for existing permissions for advising on investments or agreeing to do so.

The FCA plans to make changes to its handbook and regulatory guides and will consult on these changes later this year.