Treasury asks financial advisers how much they charge

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Treasury asks financial advisers how much they charge

HM Treasury has written to financial advice firms asking about the cost of providing advice, following last year’s change of definition.

HM Treasury wants to know whether firms have suffered additional cost or seen benefits from the new definition, as part of an ongoing review.

This is standard practice when making regulatory changes, a spokesman for HM Treasury said.

In early 2017 the 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.

The Financial Conduct Authority (FCA) gave further guidance on the matter so that firms would be encouraged to provide guidance to consumers who might not be able to afford advice.

Gwyneth Nurse, director of the financial services group at HM Treasury, said in November the new definition of financial advice should help tackle the advice gap.

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.

Both large pension providers and financial advice firms told FTAdviser in February they had no plans to offer a guidance service.

Ricky Chan, director at IFS Wealth & Pensions, said the definition change has made no difference in terms of cost or benefits.

He said: "We have always provided a bit of guidance where possible during our initial consultations with clients (done at our own expense) so the change in definition had no impact on us. 

"In terms of closing the advice gap, I am not convinced amending a definition would make any significant impact. We aim to point clients to speak to Pension Wise first to save our own time."