The Personal Investment Management & Financial Advice Association (Pimfa) is calling on providers to signpost consumers towards the advice allowance and urged the government to intervene if they don't.
In its submission to the Financial Conduct Authority (FCA) retirement outcomes review consultation, the trade body suggests as part of the regulator's reform to the wake up packs sent to customers nearing retirement – which are proposed to be sent from age 50 and not 55, and will include a one-page 'headline' document, in "clear and accessible" language – these also include a mention of the advice allowance.
Pimfa argued that "the take up of this allowance has been poor, whilst a large proportion of providers do not offer it at all".
The pension advice allowance was launched in April 2017 and allows savers to pay for pension advice by accessing three £500 instalments from their pension savings.
It was a central initiative of the Financial Advice Market Review - orchestrated by the FCA and HM Treasury - designed to help more people get access to advice who may not have been able to afford to pay for it from their disposable income.
HM Treasury previously stated it was the responsibility of the providers to market the allowance, but by May last year none of those asked by FTAdviser had any firm plans to do so, many citing a lack of demand for the cash.
FTAdviser also reported last year that it appeared the government had no data on how popular the advice allowance had been with consumers.
Simon Harrington, senior policy adviser at Pimfa, argued that signposting consumers to the allowance "should drive consumer demand which, in turn, encourages providers to offer what we believe to be a valuable tool".
Mr Harrington argued that the advice allowance "ensures that people who might not be able to afford advice can access it and, if communicated correctly and in the right context, those who would not consider it might then do so".
He believes that communicating the allowance in the wake up packs will drive consumer demand for this policy to increase exponentially.
He added: "If consumer demand is there and providers still choose not to offer it, we think there is a strong case for government to step in and do something about that."
Pimfa is also calling the government to increase the advice allowance, as FTAdviser reported earlier this week.
Mr Harrington argued that the government has committed to £1,500 over three separate periods, but that this "makes little sense".
He said: "Realistically, an individual accessing financial advice at retirement will need more than £500 and the advice allowance should be geared towards people who have never taken advice before.
"A logical solution to this would be in the first instance to keep the £1,500 figure but allow it to be accessible in one withdrawal period rather than three."