Voices from across the industry have welcomed the government’s review into how to plug the advice gap.
HM Treasury and the Financial Conduct Authority said that the review would examine both regulatory or other barriers that firms may face in giving advice, as well as how these barriers can be overcome.
FundsNetwork head of advisory services Jon Everill commented that with adviser numbers at a 25-year low at the same time demand for advice, primarily due to the pension freedoms, is on the increase, the advice gap is only likely to widen due to a lack of availability and accessibility.
Steve Patterson, managing director at Intelligent Pensions, welcomed the promise to investigate the relationship between the regulatory framework for advice and the role of the Financial Ombudsman Service and Financial Services Compensation Scheme.
He said: “It is frustrating that despite the Retail Distribution Review, the government still does almost nothing to promote the merits of financial advice. All consumers see are negative stories about advice and the government and regulators need to work with the industry to change this.
He added that there is also a lack of clarity around the requirements for simplified and focused advice, plus a lack of communication of these options to consumers.
“What is needed is for everyone to work together, from the regulator to the smallest adviser, for the greater good. The FCA’s finalised guidance to firms is about as clear as mud, and is hardly able to be communicated in a fashion that’s likely to gain any public interest at all.”
Aegon’s regulatory strategy director Steven Cameron agreed that the digital revolution continues to gather pace, creating a “huge opportunity” to supplement face-to-face regulated advice and make it more scalable through technology.
However, Hargreaves Lansdown’s Chartered Financial Planner Danny Cox said that the government’s aim to provide everyone with financial advice was hugely unrealistic and not everyone wants financial advice.
“It’s important to recognise that investors are not wedded to a particular advised or non-advised channel. Most want to mix and match, choosing to take occasional advice at major life events such as retirement.
“We need a transparent and competitive market where informed investors are freely able to shop around for the solutions which will suit them best and opt for advice when they want it.”
The Investment Association’s chief executive Daniel Godfrey commented that for those who can afford it, high-quality regulated advice from qualified practitioners will continue to be a valuable service.
“But, following recent pensions changes, millions of people are increasingly dependent on the investment industry to deliver lifelong financial well-being. To make sure all savers have access to support, the regulations governing advice and guidance have to be made clearer.”
Karen Barrett, chief executive of Unbiased, pointed out that people with moderate savings and requirements can benefit from advice too and it is important to remember that protection policies or mortgages for instance are areas where advice also plays a key part.
“Advice really isn’t ‘just’ for high net worth individuals, over a third of advisers on unbiased.co.uk say they advise on pension pots of less than £25,000, so we already know that there are plenty of advisers in the market place advising consumers with advice needs at all levels.”
Finally, The People’s Pension’s director of policy Darren Philp, stated that regulation has created an artificial divide between guidance and advice. “It is clear to us that advisers are between a rock and a hard place, and often cannot give the help and information that is all most consumers need.
“We would like a situation where advisers are able to add value for all those who want it, regardless of whether this is from a simple chat or a detailed financial plan.”
ruth.gillbe@ft.com
