The Financial Advice Market Review will examine how financial advice could work better for consumers, particularly in the light of the recent changes to pensions and the pledge for free and impartial guidance.
Officials said the aim was to “create a regulatory environment which give firms the clarity they need to compete and innovate to fill the advice gap”.
The review will come up with proposals and report ahead of Budget 2016, having considered all types of retail financial products including pensions, savings, mortgages, and insurance.
A set of principles will be produced to govern the operation of financial advice.
The IFP welcomed the review and reiterated its stance from the RDR consultation that it must define and differentiate Financial Planning from a more transactional model of advice.
The IFP said that “we must not define Financial Planners only by what they know but also by what they do”.
IFP chief executive Steve Gazzard CFPCM said: “The IFP welcomes the review and hopes that as a result the definition between advisers who sell suitable products and those who operate on a fiduciary basis will become clearer, and that this will enable both markets to expand to serve consumers better.”
He said: “We continue to see that even post-RDR the advice market consists of significant numbers of those operating on a ‘Regulated Selling of Products’ basis including some advice.
"These ‘selling advisers’ tend to have fees contingent on a product transaction i.e. they have a product proposition rather than an advice proposition. The way that these advisers operate is primarily on the basis of suitability.
“On the other hand there are more advisers now working on the basis of the ‘Provision of Professional Advice’ basis.
"These ‘professional advisers’ have an advice proposition which they charge for separate to the implementation of product. They operate acting as a fiduciary for their client, understanding the inherent conflicts of interest, managing and disclosing them openly.”
Mr Gazzard said: “Real Financial Planning is a subset of professional advice; the questioning, listening, presentation and coaching skills needed by Financial Planners are way beyond technical exams and, because of this, skills development is something IFP continues to focus on and deliver alongside advanced technical knowledge."