The City watchdog should silo advised and non-advised consumers for its investment probe to develop the two markets separately, experts have suggested.
Mike Barrett, consultant at the Lang Cat, said: "Outside of the advice sector, the vast majority of the population do not engage with a financial adviser.
"Therefore its very challenging for the FCA to address something as wide as the investment market with those two lenses on, when there is a very different experience.
"The time has come to look at those different types of consumers and develop those markets separately."
He was speaking on the FTAdviser podcast with Alistair Fullerton, adviser and director at Lathe and Co.
Mr Fullerton agreed. He said: "It's quite generalist to call it an 'investment market review' when there are so many permutations with that.
"Trying to segregate it fairly and make the system work for all is going to be tricky."
As part of the FCA's Call for Input, the regulator proposed shaking up the funding structure of the Financial Services Compensation Scheme in order to ensure the polluting firms paid more of the cost.
Mr Fullerton was pleased with the suggestion. He said: "The FSCS levy feels unfair. It's expensive, jumps up and is outside our control.
"Separating things and allocating products by risk is a good starting point."
Mr Barrett suggested that segregating advised and non-advised consumers would go someway to helping the regulator sort the funding structure.
He said: "The FCA is placing too much emphasis on the end investor, talking about improved disclosure and education, effectively asking the end investor to navigate their way through the minefield.
"I think the FCA should do something about the minefield and remove the products that cause harm.
"Risky products, like crypto currencies, most non-advised they should not be going near. Just simplify the product range."
Mr Fullerton and Mr Barrett also discussed the role of direct to consumer platforms, the potential for pay as you go advice and the problems surrounding appointed representatives.
Later, Imogen Tew and Rachel Mortimer, senior reporters at FTAdviser, talk to Simoney Kyriakou about the Keep Fees Fair campaign and the biggest headlines of the week.
To listen to the full podcast, click on the link above. FTAdviser's podcasts are also available on Acast and are available to download on iTunes and Spotify.
imogen.tew@ft.com
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