Financial Conduct Authority (FCA) chief executive Martin Wheatley struggled today to answer calls from the Treasury Select committee (TSC) for clarity around advised and non-advised online sales.
Asked by commitee chairman Andrew Tyrie how the FCA was drawing the distinction between advised and non-advised sales on the web where there was no human interaction, Wheatley (pictured) failed to give a clear answer but said the issue was a "real concern".
He said it was possible to give advice online to consumers virtually as well as sell non-advised products and that websites needed to "be clear when advice is given and when not".
But he admitted that the FCA had reason to revise its current guidance on the issue, and consumers were running the risk of being misled.
Wheatley said: "A lot of people would feel that once they've been taken a couple of steps through some sort of guided process they've been advised.
"It is a real concern because the distinction between a product that is advised on the web and execution-only on the web is not a distinction that people normally and easily can determine.
"And so we are spending quite some time talking to the industry about whether we need to revise our guidance and make products fall very clearly into one class or the other."
But Tyrie said: "We have agreed that it is a concern. I'm asking you for evidence that you are bringing some clarity to the piece."
He warned Wheatley that continued uncertainty could drive firms out of the market alltogether as they feared the consequences of the regulator changing its mind at a later point in time.
Wheatley said the regulator was working with the industry to "try and find out how we can make that dividing line [between advised and non-advised products] much clearer to both, the consumer and the adviser".
He reassured the TC that the regulator will issue a consultation paper in the coming quarter.
Wheatley's comments came after committee member Conservative MP Mark Garnier accused the regulator's Retail Distribution Review (RDR) of having caused consumer detriment by creating an advice gap and stifling innovation.
Wheatley said innovation was happening in the sector with new technology emerging.
He also defended adviser numbers, saying they were replenishing particularly in the IFA space, where previously staunch RDR critics have now "got on with it" and "made a good business out of it".
Banks on the other hand, he said, had so far "failed to find more cost effective ways to deliver a solution that people want".
