Peter Mann, former vice-chairman of Old Mutual Wealth and chief executive of Bankhall, said the 2012 Retail Distribution Review has been unsuccessful in improving accessibility to financial advice.
The Retail Distribution Review required advisers to ditch commission in favour of customer agreed remuneration and raised their qualification level in order to operate in this industry.
According to then regulator, the Financial Services Authority, the Retail Distribution Review was a key part of consumer protection strategy.
The FSA stated; "It is establishing a resilient, effective and attractive retail investment market that consumers can have confidence in and trust at a time when they need more help and advice than ever with their retirement and investment planning."
However adviser numbers dwindled following implementation of the Retail Distribution Review.
In 2015, the FSA's replacement, the Financial Conduct Authority, reported the number of financial advisers offering professional advice had fallen from around 26,000 in 2011 to 24,000 in 2014.
Mr Mann said it was clear the financial planning sector required a rethink of its current regulatory framework to make advice relevant to everyone and not just ‘people who have money’.
Speaking at the Momentum UK Financial Wellness Roundtable, Mr Mann said lessons could be learnt from South Africa, which has two separate frameworks to suit the wealthy and non-wealthy.
Mr Mann’s comments follow research from Momentum UK, which suggested a large portion of the UK would struggle to meet the current costs of financial advice.
The UK-wide survey of approximately 2,000 individuals conducted in late 2016 found a third (32 per cent) of UK adults would find it difficult to meet an unexpected major expense, two fifths (39 per cent) have had to make cutbacks in the last year to make ends meet, while a quarter (24 per cent) of UK adults have less than £100 in savings.
According to a report from search-for-an-adviser service Unbiased, the standard hourly fee for a financial adviser in the UK is £150 and an initial review costs an average of £500, while more specialist advice, on areas such as direct benefit transfer, will cost closer to £1,500.
On top of this, just one in five advisers (22 per cent) deal with clients of any wealth level.
At the roundtable, Mr Mann stressed that the responsibility for making advice affordable did not lie just with advisers, as “financial services manufacturers have a large role to play in bringing products and services to their customers” and that “understanding of the client should go through all of the parts of the value check.”
His sentiments were echoed by Matt Connell, director of policy and engagement at the Chartered Insurance Institute, who suggested a new Retail Distribution Review was needed “that was suitable to people’s lives”.
Lucian Camp, of Lucian Camp Consulting, added that he was worried “about the affordability of advice for the mass market consumer”.
Speaking after the event, Samantha Seaton, managing director of Momentum UK, said: “We must find a way to make the economics work so that financial advice is available to the mass market for the right price.
