The Financial Advice Market Review published its main findings and recommendations yesterday morning – including a change in how regulated advice is defined.
It said there was a “clear need for intervention” in the advice market from the FCA and government.
Graham Vidler, director of external affairs at the Pensions and Lifetime Savings Association, said: “FAMR’s calls for greater affordability and accessibility are welcome but we struggle to see this becoming a reality in the near future, even if savers are allowed to access their pension pots early to pay for advice – the cost of which still represents a big proportion of the average pension pot.
“An alternative approach is needed to support the great majority of savers who will continue to be excluded from financial advice, particularly when it comes to making decisions about their retirement incomes.”
The panel called for the Government to consult on changes to legislation to “narrow the definition of regulated advice so that it is based on a personal recommendation”.
They said this would make financial advice and guidance more affordable for consumers and create a single definition for regulated financial advice and remove some of the barriers that exist for firms wishing to offer guidance services.
Chris Hannant, APFA’s director general, welcomed the report but said: “More could be done and the conclusions represent a missed opportunity.”
He said: “While many of the proposals will be helpful, concrete measures beyond further clarification and guidance are needed. In that sense, the review of FSCS funding is a substantive and positive step in the right direction. It is essential that the government closely monitors access…I expect we will need to revisit the debate about access in the near future as I think further steps need be taken.”
Guy Myles, founder of new advice firm Flying Colours, said: “It is frustrating that the FAMR recommendations are not saying much we don’t already know. The advice gap still exists today. It can only be closed by growing the number of consumer choices available for top quality, regulated financial advice, in a low cost format. This is one of the key things the report is pointing to.
“It’s up to newer entrepreneurial companies to close this gap by being innovative, using developments in technology to be able to offer high quality personalised advice. Our industry has to find a way of reducing costs without compromising on customer service.”
Andrew Pennie, head of pathways at Intelligent Pensions, said: “We welcome the report identifying the need for people to receive effective advice in the pre-retirement years.
“We have been championing the need for more affordable advice solutions in the years approaching retirement rather than the current system of wake up packs and ‘one size fits all’ investment solutions which simply aren’t working.”
Claire Trott, head of pensions technical at Talbot and Muir, said: “Any changes that make access to financial advice and guidance easier for those that fall into the “advice gap” should be welcomed, it is key that individuals understand the implications of any decisions they make.
“Gaining access to help well in advance of retirement is key, which is where Pensions Wise leaves a big gap. Individual’s need to be engaged with the process as early as possible to ensure a successful retirement and ongoing financial stability.”