The Association of British Insurers is calling for an advice and guidance overhaul after it found three-quarters of savers were unprepared to pay for this service.
At the ABI’s conference on pension freedoms today (November 18), Huw Evans, director general at the trade body, will call for a “fundamental rethink” of the regulatory environment to facilitate new forms of advice and guidance.
The ABI believes changes are needed to shift the advice and guidance boundary and to enable savers to get advice that it is simpler and more affordable.
It said pension providers are currently restricted as to the level of guidance they can give savers.
A poll by the ABI found that out of more than 2,300 people, nearly three quarters (72 per cent) said they would not pay for advice.
Meanwhile nearly half (46 per cent) wanted the option of one-off financial advice instead of the traditional model of ongoing fees (12 per cent).
The ABI said the Financial Conduct Authority's work on the Financial Advice Market Review and consumer investments market provide an opportunity for "reform and to enable advice that is simpler, more accessible and fit for the future".
Mr Evans said: “When people have saved all their working lives for their retirement, it is not good enough to allow most of them to make complicated judgements about drawdown rates, annuity options and pension options with very limited help.
“This is a shared responsibility for providers, regulators, advisers and government bodies.
“With the Brexit transition period coming to an end, the FCA has a uniquely timed opportunity to devise a system suitable for UK pension freedoms that ensures the majority of savers have access to either guidance or advice as they take decisions that will shape the rest of their lives.”
The ABI’s calls have been backed by a number of providers and advice firms.
Gemma Harle, managing director of Quilter Financial Planning, said the profession needs to think about the wider remit of financial advice and tools available to help combat the vast advice gap.
Ms Harle said: “We know that traditional financial advice is not suitable for every single person, but we also know that almost everyone would benefit from some help, guidance or simplified financial advice at some point in their life and in particular at the point they start thinking about withdrawing from their accumulated pension funds.”
She added: “Encouragingly, the FCA has started to look again at guidance and simplified financial advice as part of its call for input on the consumer investment market.
“This momentum must not be lost as it is critical for the financial wellbeing of the nation that the regulator, government and industry work together to ensure we can deliver the financial support people need.”
Meanwhile, David Stevens, director of savings and retirement at LV, said if these issues were not tackled soon it could lead to poor outcomes for clients.