Review launched into making cheaper financial advice available to all
Government concerned that only the rich have access to advice on their finances.
A major review has been launched by the Government to look at how financial advice could work better for all working people, not just those with significant wealth.
The Government is concerned that only the rich seek advice when managing their finances, leaving others who can’t afford to pay for help to make important decisions about savings, investments and mortgages on their own.
The Financial Advice Market Review will be led by HM Treasury and the Financial Conduct Authority (FCA) and will look at this gap, as well as how access to advice could be opened up to more people.
The ‘advice gap’
Financial advice is typically only sought after by those with a large amount of wealth, as the cost can be quite high, but regulatory changes have also contributed to worsening this ‘advice gap’.
The Retail Distribution Review (RDR) changed the landscape of financial advice when it came into force at the beginning of 2013. Advisors now have to charge a fee, rather than relying on commission and have to be completely independent to ensure their service is unbiased.
As a result of the changes firms like banks have withdrawn from offering financial advice services, which has widened the ‘advice gap’ for ordinary people.
What will the review do?
The Government wants to make sure everyone can access high quality, affordable, tailored advice and guidance to help them make better informed financial decisions.
One of the options being considered is to strengthen existing schemes like the Money Advice Service. This is a free advice service, that although funded by a levy on financial institutions, operates independently.
But it could also mean banks and investment firms could be forced to offer more affordable financial advice.
Economic Secretary to the Treasury Harriet Baldwin said: “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.
“That’s why we’ve launched a major new review 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.”
The review will be led by Tracey McDermott, acting CEO of the FCA, and Charles Roxburgh, Director General of Financial Services at the Treasury.
They will start work in the autumn and will report back on their findings and recommendations ahead of Budget 2016.
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