Advisers are calling on the FCA to work with the industry to close the advice gap after chief executive Martin Wheatley finally admitted the RDR was damaging access to advice.
Appearing before the Treasury select committee this week, Wheatley raised concerns over the withdrawal of banks and insurers from the mass market advice space post-RDR.
He told MPs: “It is a concern that people with portfolios below £50,000 or £100,000 are not getting the same service they were getting. That is a concern.
“There are some issues with the withdrawal of mass market providers. You can question how much was advice before or just sales dressed up as advice, but nonetheless people below a certain portfolio have less access.”
FCA figures, published last month, show adviser numbers have dropped 15 per cent from 25,616 in December 2011 to 21,684 in July 2013. Bank adviser numbers are down 47 per cent, from 8,658 to 4,604.
Apfa director general Chris Hannant says the trade body is in talks with the FCA to make it easier to run adviser firms post-RDR and as a result pave the way to closing the advice gap.
Hannant says: “There are a number of difficulties of doing business with the regulator, such as fees and reporting standards, which could be changed to make it easier to run an adviser firm.
“If it is easier to run a business and the costs are lower, it is therefore cheaper to provide advice and more firms could enter the market and help fill the advice gap.”
A British Bankers’ Association spokeswoman says: “Further work is required to address the advice gap as we do not believe the needs of customers with less than £50,000 to invest will be met via non-advised and execution-only services alone.”
Lansons director of regulatory consulting Richard Hobbs says: “The FSA was repeatedly told the RDR had a strong exclusionary effect at the bottom end of the market but ignored it.”
Conservative peer Lord Robin Hodgson, who has campaigned over the advice gap, says: “This is closing the stable door after the horse has bolted.”