The review is going to look into the regulatory barriers firms may face when providing advice as well as seeking to address any issues that might be putting off consumers from getting advice.
It will consider all types of retail financial products, including pensions, savings, mortgages, and insurance, and will look at opportunities and challenges presented by new technologies, such as so-called ‘robo-advisers’.
The government said the inquiry was designed to build on the recent pension reforms which have allowed people over 55 greater access to their pension savings and offered them access to free and impartial guidance.
The review is to be led by the new acting head of the Financial Conduct Authority (FCA), Tracey McDermott, and the director general of financial services at the Treasury, Charles Roxburgh. It is due to report its findings before the next Budget in 2016.
“Making sure that our financial services sector supports working people at every stage of their lives is a key part of our long term plan,” said the economic secretary to the Treasury, Harriett Baldwin, who announced the review while on a tour of Edinburgh and Glasgow’s financial services industries.
Baldwin said the aim of the review was to “explore what more can be done to make sure consumers can access high quality and affordable advice so they can make informed decisions with their hard-earned money”.
Industry agrees
In general the move has been welcomed by the financial advice industry.
The Investment Association, which represents the UK’s investment industry, said it was important to make sure all savers are able to access investment in a cost-effective way and therefore the regulations governing advice and guidance had to be made clearer.
“The time has come for the Government and regulator to tackle the advice gap so that people are able to cope with financial hardship, save up for the things they dream of and have confidence that they will enjoy a comfortable life as they get older,” said Daniel Godfrey, chief executive of the Investment Association.
Garry Heath, director general of Libertatem, a trade association representing UK financial advisers, said the review very timely as “where we are now is not a good place.”
“You can end up giving perfectly compliant advice and end up with a six-figure claim (at the Financial Ombudsman Service), which you can’t appeal against,” he said.
