The distinction between financial advice and other information or guidance services has become blurred with dangerous consequences, Billy Mackay has warned.
In provider AJ Bell’s response to the Financial Advice Market Review, marketing director Mr Mackay said the firm had warned that people may think they have received advice specific to their needs when they have not.
Moreover, AJ Bell believes that some people do not understand the value of financial advice or guidance, so do not use either of them.
Mr Mackay said addressing this lack of distinction between advice and guidance is crucial to improving consumer engagement with both options and should be one of the principle outcomes of the FAMR.
He called on the FCA and the Treasury to identify a clearer definition of what consumers can expect from financial advice when it is relative to guidance services.
“Two simple definitions for advice and guidance need to be mandated by the FCA for use across the industry, and all of the existing definitions should be removed.
“This will enable people to understand whether advice or guidance is most appropriate for their specific needs and increase the use of both,” Mr Mackay added.
Garry Heath, founder of IFA trade body Libertatem, said: “I am convinced that the FAMR marks a time for bold thinking and bold ideas. We have an opportunity to re-shape the regulatory regime to ensure the future of professional advice for advisers and the consumer. The adviser industry has been calling for change and we must grab this with both hands.”