UK industry tackles ‘advice gap’

ifa reported in February that the UK industry is experiencing an "advice gap" as a result of adviser losses following new industry reforms, including higher education standards.

In a statement, the Financial Conduct Authority (FCA) said its Financial Advice Market Review (FAMR) found a need for "intervention" by the regulator and government both to help consumers and the industry benefit from cost-effective ways of delivering advice.

These recommendations include narrowing the definition of "regulated advice" and removing some of the barriers that exist for firms wishing to offer guidance services. The report also highlights the role that technology can play in offering cost-effective advice, and recommends that the FCA establish a unit to help firms develop automated advice models.

Further, FAMR calls on the government to allow consumers to redeem a "small part" of their pension pot against the cost of pre-retirement advice. This is intended to ensure that consumers can access advice as they approach retirement.

"FAMR builds on improvements made to the financial advice industry brought about by the Retail Distribution Review (RDR) which raised the standards of professionalism across the financial advice market," the statement said.

"FAMR outlines practical ways to enable consumers to engage with and access advice and guidance, urges changes to how financial advice is defined and suggests a new advice framework to help firms best meet the needs of consumers.

"The report makes a range of recommendations aimed at ensuring firms are able to provide more affordable advice for more consumers."

FCA acting chief executive Tracy McDermott said: "The package of reforms we have laid out today will help increase both the accessibility and affordability of the advice and guidance to ensure that consumers get the help they really need when they really need it."