Factory gating advisers risk breaching FCA rules

He said: "However, that is not to say the principle doesn't deserve scrutiny amid concern over potentially unsuitable advice given to savers cashing in final salary pensions."

Mr Richards quoted the recent figures on pension transfers from HM Revenue & Customs, which show that flexible withdrawals from retirement have grown to a total of £17.5bn since pension freedoms was introduced.

He also noted that recent research published by the International Longevity Centre and Royal London showed that those who receive financial advice are on average £40,000 better off than those who don't.

He said: "So the demand and benefits are plain to see, but over-commercial activities can distort the true picture and erode public confidence and trust in the advice profession.

"However, whilst we should not confuse genuine marketing activities with factory gate examples of late, the sector needs to be extra vigilant at a time of high visibility and focus by government and regulators."

Alistair Rush, principal at Rutland-based Echelon Wealthcare, and one of the financial advisers that was involved in a free counselling campaign for steelworkers, said it may be the case advisers are getting around the rules by using introducer firms.

He said: "But there isn't anything stopping them of doing it. If your financial promotion regulations are being satisfied, then you are covered. The issue is if whether is the sort of practice that advisers should be doing.

"Targeting people [by factory gating] is different from a general promotion, which is done far more broadly.

"With this, you are focusing on people who you know potentially are going to be in a frame of mind that makes them more vulnerable, so I do think that you have far more responsibilities."