Keith Richards, chief executive of the Personal Finance Society, welcomed the attention Mr Kinnock is giving to the issue but said copying the solicitor model was not the answer.
The PFS has raised the problem faced by firms in this area with the FCA and government in the past when it proposed a savings and investment monetary protection and education levy, collected centrally by government and paid into a pooled risk-based fund.
The underlying idea of the levy is that it would be covered by a relatively small deduction of about half a basis point from the total funds under management per year in the UK, about £9.1trn in 2017.
Mr Richards said: “As we continue to outline, a viable solution needs to be based on the dynamics of the regulated advice profession, rather than comparing our sector with other sectors where there is no equivalence or correlation.”
Alastair Rush, principal at Echelon Wealthcare, who has also been involved in helping steelworkers with their pension decisions, agreed the current rules needed reform.
He said: “It makes perfect sense and when I first learned of the shortcomings in our system I was stupefied.
“It’s like having car insurance but only if you hit a red car and not a blue one, and the moment an insurer hears that you got a car, it can cancel your cover and leave the other driver without redress. It’s bonkers.”
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