FCA commits to further work on advice gap

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The FCA has committed to carrying out further work to address the gap in the provision of advice to lower-value customers.

At the FCA’s annual public meeting today, outgoing chief executive Martin Wheatley said: “We know the RDR has not solved all of the problems and further work is needed.”

Responding to a question from Money Marketing, Wheatley said the advice gap is the most significant issue.

He said: “The RDR has certainly removed product bias and the industry has stepped up to the professional standards which has been a huge success.

“The gap is for the relatively smaller sized pots, as to whether – with all the liability that comes with giving advice – there is enough provision of service for those with simpler needs and less to invest. That’s the gap which we are committed to doing some more work on.”

The regulator said in December there was “little evidence” the RDR had resulted in an advice gap.

As part of its third and final post-RDR implementation review, it commissioned Europe Economics to review the advice gap.

The FCA concluded: “There is little evidence that the availability of advice has reduced significantly as a result of the RDR, with the majority of advisers still willing and able to take on more clients.

“However by revealing the true cost of advice, the RDR has led some consumers to consider the extent to which the advice they receive represents value for money, and in some cases conclude it does not.

“This group includes consumers who would be likely to pay for a cheaper form of advice, for example that which may be provided by a simplified advice model. We will continue to monitor the provision of advice going forward.”