Aegon has called for advice definitions that are designed for consumers, rather than compliance technicians, in its response to the Financial Advice Market Review.
The firm said that 86 per cent of advisers - from a survey of 200 conducted by Censuswide - believe there needs to be clearer communication about the different types of financial advice and guidance available.
The deadline for FAMR consultation responses is tomorrow (22 December) and in its response, the provider set out four priorities for what it wants to see emerge from the review.
The first of these is defining different ‘advice’ services in consumer, not regulatory terms, while the second is developing a clearly defined service between no advice and full advice.
Thirdly, Aegon suggested that customers are offered a ‘triage’ service to further help them find the type of advice or support they need.
Finally, it said that the government and regulator should aim to improve the cost effectiveness of full advice through tailored regulation for focused advice.
Aegon also cited OnePoll research amongst 2000 UK adults that it commissioned, which revealed that 65 per cent of consumers believe it is their responsibility to determine whether advice may be helpful.
Alongside this, 56 per cent of advisers believe it is their responsibility to educate people when it is advisable to take advice.
Steven Cameron, regulatory strategy director at Aegon said that there is no silver bullet to closing the advice gap, but an excellent starting point would be to address the widespread customer confusion around the differences between advice, personal recommendations and guidance.
“Consumers are understandably confused and find it difficult to distinguish between the boundaries and benefits of advice and guidance. We need to develop clear, intuitive definitions that truly resonate with customers, rather than being designed by regulators for compliance technicians.”
Ahead of the FAMR deadline, LV also warned of a pensions mis-buying crisis within the next five years, if the lack of affordable, accessible and regulated advice is not resolved.
The firm said that an estimated 480,000 people in the UK are entering retirement each year without getting financial advice, following a survey in which 1,033 online interviews with UK adults aged 55 and above conducted earlier this month.
LV’s recent study found that 78 per cent of over 55s do not plan to seek professional retirement advice, noting that with the average pension pot now standing at £50,000, the total value of finances potentially at risk could run into billions of pounds.
Richard Rowney, managing director of life and pensions at LV, commented that too few people get the right advice they need, with many not shopping around, resulting in ill-informed investment decisions and buying products that may not be appropriate to their circumstances.
“We need a system where consumers can be assured their lifetime savings are safe and they can get affordable, accessible, regulated advice. It’s up to government, regulators and the industry to make that happen.”
Jason Whyte, director in EY’s insurance practice, stated that above all, financial advice must be affordable, uncomplicated and trusted by those who need it. “To successfully achieve these three elements, greater use of technology to improve productivity and lower the costs of advice will be essential.”
Last week, research by provider Zurich revealed that three quarters of advisers had not yet responded to the Financial Advice Market Review.
The research was carried out between 18 November and 4 December amongst 139 advisers belonging to the New Model Business Academy and 70 per cent did say they were planning to respond to the consultation before it closes this week.
ruth.gillbe@ft.com
