Navigant also says the RDR persists with using old regulatory distinctions that only serve to complicate and confuse consumers.
Head of life and pensions Kenn Taylor says the model set out in the discussion paper not only breaks the financial services industry into too many parts, it is also too complicated.
He says: “The FSA has suggested four tiers of consumer advice: professional financial planners, general financial advisers, primary and generic advice, with each tier having different educational requirements, payment methods and the ability to call itself something different if it wants to. However, we should be making advice services more simple and easier for the consumer to understand. These proposals seem to do precisely the opposite.”
Taylor says the main challenge to firms is finding a way in which advice can be provided cost-effectively.
He says: “Although professional standards are important, they will do nothing to solve the economics of distributing to the mass market. As it stands, the more wealthy segments of the market are well-serviced and profitable for advisers. However, the mass market will only become profitable in a lighter touch regulatory environment.
“The key is to reduce confusion, increase clarity and address the concerns in the market. Therefore, we believe there is only space for two routes: professional advice and general guidance with clear connections to move between the two.”