It’s folly to depend on the banks and providers

This shouldn’t come as a surprise because there is a view in policy circles that such advice is not reaching enough of the population, something that was underlined by the pension freedom reforms.

This is not to criticise investment advisers – you must get on with running your businesses and advising clients as you see fit, even if that has meant moving upmarket. Advisers may also say that the current situation regarding the advice gap is the result of decisions taken by policymakers and regulators. This is also true, but that policy looks certain to shift.

It goes without saying, surely, that a return to the world of direct sales forces would be an unwelcome step

The advice industry has already seen one revolution in its business model, with the RDR. But pension freedoms have effectively created another revolution – albeit a pretty popular one – for advisers’ clients. That’s quite a bit of change already.

So, given that it is ostensibly about closing a gap, the first thing any review should take on board is the idea of doing no harm to the existing advice infrastructure. In other words, don’t widen the gap. This columnist remembers demanding the same thing from the FSA when it first mooted the RDR – with the plea falling on deaf ears, of course.

My real fear is actually about something else. Change may well need to happen, but if change is implemented purely in the interests of the big financial firms, or to meet this week’s clamouring headline in the Telegraph or Daily Mail, then it may not serve consumers well.

It goes without saying, surely, that a return to the world of direct sales forces would be an unwelcome step. Some may consider this a matter of ancient history. But in my view, the RDR in its early version came close to allowing the banks to make a huge comeback into financial services distribution through primary advice.

Shortly afterwards, banks were revealed as uniquely unsuited to offering customers suitable investment advice. It could have been a disaster. The FCA should not come under pressure to make the mistake it nearly made then.

I do think it is inevitable that customers – orphaned or otherwise – may require more help than they currently receive from their providers. However, it will be important to consider whether the second line of defence is working effectively or not. There is a risk of conflict of interest if providers are allowed to offer too much help. But at the same time, leaving people flailing about by themselves is hardly optimal either.

Concessions may be inevitable, yet my preferred option would be a reform built on the existing advice infrastructure. That means looking at ways of increasing UK adviser numbers. Why not aim to double them?

It could also mean seeking ways to build a more accessible, targeted and commercially viable advice proposition that could be offered by IFAs rather than putting most of the emphasis on conflicted providers or compromised banks.

John Lappin writes on industry issues at www.themoneydebate.co.uk