“Advice” is a loose word in everyday speech. A friend advises you on a restaurant. A colleague advises you to take the earlier train. In financial services it is far narrower, and the narrowness is the point.
The legal meaning
Under the Financial Services and Markets Act, advising on investments means giving a person a personal recommendation about a particular investment — one that takes their circumstances into account. That is a regulated activity, and it can only be carried out by a firm authorised by the Financial Conduct Authority.
General information is different. Explaining what an ISA is, how a pension differs from a general investment account, or how compound growth works, is not advice. It describes how something functions without telling any particular person what to do.
Why the distinction has teeth
When a firm gives you regulated advice, obligations follow. It must assess whether a recommendation is suitable for you, document why, and act in your best interests. If it fails, you can complain to the Financial Ombudsman Service without cost, and the Financial Services Compensation Scheme may cover losses if the firm collapses.
None of that attaches to general information. That is not a loophole — it is a reasonable trade. Information carries no duty because it makes no claim about your situation.
The grey area, and how to handle it
In practice the line gets tested by how a question is asked. “How do these two products differ?” invites information. “Which of these should I choose?” invites a personal recommendation. The second question needs an authorised adviser, even when the first was fine.
A firm that answers the second question without authorisation is not being helpful. It is carrying on a regulated activity it is not permitted to carry on, and you are left with none of the protections you would otherwise have had.
What to do with this
- Ask any firm directly whether it is authorised, and check the answer on the Register yourself.
- Notice which kind of question you are asking. If you want to be told what to do, you want an authorised adviser.
- Treat a firm that is vague about its own status as a reason to slow down, not speed up.
St James Finance Ltd is not authorised or regulated by the FCA. We provide general information, and where a matter calls for a personal recommendation we introduce people to advisers who are authorised to give one.