Keith Richards, chief executive of the Personal Finance Society, argues direct sales forces selling long-term savings products are long gone - and the unlimited period of liability for advisers should be too.
Speaking to FTAdviser’s Emma Ann Hughes, Mr Richards said when the law of limitation was removed from the advice sector, it was in a very different age that was dominated by direct sales forces selling long-term savings products, for example 25-year savings products.
In the latest FTAdviser video interview, Mr Richards said we’ve moved on significantly since then.
Mr Richards said: “Professional advice today isn’t about selling 25-year endowments and therefore it is about time that the law of limitations came back in and is applied. So I think we need to address that.
“The government clearly recognise that professional advice has been forced further up the value chain therefore leaving an even bigger void for the mass market effectively creating a level of social exclusion for the general public, which has become highlighted and exasperated through their own reforms where more and more people want to take full advantage of freedoms and in order to do that they would be better off getting some form of advice.”
When quizzed on what he was hoping would come out of HM Treasury and the FCA’s Financial Advice Market Review, Mr Richards said the solution to the advice gap may not need to be complex full financial planning.
He said: “What the government is looking at is are there ways in which that (advice for the masses) can be done.
“Now under the current regulatory structure advice is advice and although simplified advice was put in the rules back in the pre-RDR days, no-one took up on it because it carries the same level of unlimited liability as full advice so why on earth would you want to do that?
“I think what we will see is some mover towards certainty of liability in to the future rather than the removal of public protection is actually giving certainty of what layers or levels of advice might be given the public.”
Mr Richards said even if nothing changes as a result of the Financial Advice Market Review, professional advice has really come into its own and is increasingly recognised for the value that it represents.
He said: “That however doesn’t solve the needs of the masses and whether or not existing advice firms want to be involved in offering different levels of advice, for example an entry level or a simplified level of advice could be introduced with an element of certainty surrounding future liability.”
emma.hughes@ft.com
The headline of this article has been revised as the original did not relate to content included in the video.
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