The Law Family Commission on Civil Society has called for the UK’s Financial Conduct Authority (FCA) to make philanthropy advice training mandatory for financial advisors.
It has also urged the regulator to introduce new regulation that ensures it is discussed with clients.
The call to action was carried out by Pro Bono Economics and recommends the FCA to improve “the quality and the quantity of financial advice and guidance on philanthropy” in the UK, making four key recommendations.
Its report asks the FCA to demonstrate to the financial services sector the important role that philanthropy can play in unlocking public benefit.
Other recommendations include mandating education and training on philanthropy for relevant financial advisors, and introducing sustainability requirements into suitability assessment, with an emphasis on philanthropy’s role in contributing to sustainability efforts.
The Law Family Commission on Civil Society found that if every individual in the top 1% of earners who is currently donating below 1% of their income, raised their giving level it could generate up to £1.4bn a year for charities.
Speaking on the call to action, DKK Partners co-founder Dominic Duru said, “The FCA can and should do more to advise firms about how best to engage philanthropic and charitable initiatives. With the cost-of-living crisis making life increasingly difficult for millions of people, our industry needs to step up and set an example, thinking of new ways to help the most vulnerable in society.”
The report, ‘Giving advice: The case for the FCA to act on philanthropy’, claims there are only a handful of firms offering high-quality philanthropy advice to all clients. It puts the reasons down to lack of incentive, traditional mindsets and culture and a lack of regulatory clarity and leadership.
Its data also claims that the top 1% of earners cut their typical charity donation by a fifth between 2011-12 and 2018-19, despite incomes increasing. Greater action by financial advisors could help turn that decline around.
Last week, the FCA warned the stock trading app operators to review design features, particularly around gamification. It believes these services could encourage people to invest beyond their risk appetite.
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