The regulator has still yet to quantify the advice gap created by the Retail Distribution Review, or assess if an advice gap exists in the first place, a Financial Conduct Authority representative admitted at a roundtable event in London today (10 April).
The former regulator had said it would publish a study quantifying the advice gap in January 2013, but Colin Wilcox, a member of the watchdog’s RDR implementation team, admitted it still did not know how many people will be denied access to advice.
Speaking at a debate on the new rules hosted by FE Trustnet, Mr Wilcox said external surveys vary wildly, with some saying 5m people will be left without advice and others saying almost that as many unadvised consumers could decide to pursue advice given the changes wrought by RDR.
Mr Wilcox said the reality would likely be “somewhere in the middle”, suggesting an advice gap in the low millions. He added that slack from bank exits was being taken up by smaller advisers offering cheaper online services, saying this trend would likely grow in the coming years.
He said: “The market is adapting; the market is evolving. We are seeing some financial advisers moving what you might term upmarket, but certainly some advisers are looking at the lowest end of the market and they are building new models in an attempt to service that market.”
“A lot of them are based around what will look like simplified advice.”
Earlier this year the Chartered Insurance Institute published research suggesting the existence of an untapped market of as many as 14m unadvised potential customers.
However, Wilcox said “the jury is still out” on how big a prospective client’s assets have to be in order to make doing business with the sustainable for an adviser.
He added: “Quite a few smaller financial advisers are building online propositions seeking to tap into that market. They are looking for a straightforward route.”
