Gwyneth Nurse, director of the financial services group at HM Treasury, said the new definition of financial advice should help tackle the advice gap.
Earlier this year HM Treasury rolled out a new advice definition for regulated firms, in keeping with the recommendations made by the Financial Advice Market Review.
Set to become active from 3 January 2018, the new definition stipulates that regulated firms will only be giving advice when providing a personal recommendation.
Unregulated firms, on the other hand, will still be bound by the wider Regulated Activities Order definition of advice – “advising on investments”.
Speaking at the Personal Investment Management & Financial Advice Association summit in London today (8 November), Ms Nurse said the new definition of financial advice was one way the government was trying to improve the availability, affordability and quality of financial advice in the UK today.
Ms Nurse said: “In light of the concern the market for financial advice was not working well for all consumers, the Treasury and FCA launched the Financial Advice Market Review in August 2015.
“The government amended the definition of regulated financial advice, bringing it into line with European Union under the definition set out by Mifid, which will come into effect in January.
“The new definition of financial advice gives greater certainty and clarity to regulated financial firms.
"This [the new definition] should allow regulated firms to better help their customers make their own decisions about financial matters.”
But Garry Heath, director general of Libertatem, said far from offering greater clarity and certainty the new definition had left advisers as muddled as ever and had failed to push them back towards the mass market.
Mr Heath said: "The number of advisers continues to shrink.
"It is not our fault that the [Retail Distribution Review the FCA] created has pushed the cost of advice further and further up."
In terms of improving the affordability of financial advice, Ms Nurse also said the Financial Conduct Authority published guidance on streamlined advice in September.
According to Ms Nurse this guidance looks to cut down the time an adviser spends producing a suitability report and conducting fact finds, which will decrease costs to consumers.
emma.hughes@ft.com
