Long road to regulation

“The mad race to the bottom by many businesses to reduce their fee levels further exacerbates the crazy obsession with the price of everything and the value of nothing,” he claims.

For veteran adviser Pete Slater, managing director of Uberrimae Fidei, the advent of fee-charging as opposed to commission under RDR has had the opposite effect of meeting the regulator’s aims, and FAMR has not changed that.

“It has led many advisers to only offer advice to those with in excess of £200,000 to invest,” he explains. “The man in the street who has just inherited £30,000 is the person who actually needs professional help and advice and yet he is the person who is being turned away.”

Can the advice gap ever be closed?

The 85-page FAMR final report, issued in April 2016, recommended ways to close the advice gap, including a new definition of regulated financial advice and ways to improve self-directed ‘guidance’ services. It said: “The advice market can be made to work better. It is important to expand access to high-quality guidance services.”

HM Treasury and the FCA also recommended modifying time limits for employees to attain an appropriate qualification, giving businesses more flexibility to “develop a new generation of advisers”, and building on the regulator’s Project Innovate to help develop automated advice models.

But clients do not always understand the different types of advice, guidance or signposting that FAMR aimed to provide. According to SimplyBiz’s member companies, 76 per cent do not think clients have a clear understanding of the advice available post-FAMR.

Given this, is the closing of the advice gap achievable? “In a nutshell, no,” says Mr Bradley. “It never will be, despite the good intent.”

Mr Neilson says a twin-track approach is required if matters are to be improved. “People need to know to seek advice and the difference it can make to them.

“Equally, there has to be enough supply to meet demand, and this is not necessarily about having more advisers or relying on robo-advice services. Closing the advice gap completely may be a tall order, but that’s not to say it isn’t worth trying.”

The PFS’s Mr Richards acknowledges the RDR widened the advice gap and furthered “social exclusion”. He does not believe the FAMR has achieved – or can achieve – its objectives, given the current political climate.

“When I first met with Harriett Baldwin [then economic secretary to the Treasury] ahead of the FAMR announcement, it was clear she understood the issue and only with government intervention could the advice gap be addressed. Unfortunately Brexit got in the way of progress.

“Government has been sidetracked by Brexit, but as the elected representatives of the UK public and leaders of strategy we need it back on the case of FAMR. It’s not the job of the FCA. There is little doubt, in my view, that the profession has come of age. But the advice gap will get wider unless the government gets engaged.”