Financial Conduct Authority watchdog acts to make financial advice affordable

The Financial Advice Market Review recommended establishing a unit to help companies develop automated advice and drive down costs

An estimated 16 million people need pension and savings advice (Getty)

The City Watchdog has outlined plans to close the so-called advice gap, which has left millions of people unable to afford help in making complicated financial decisions.

The Financial Conduct Authority and the Treasury yesterday published a report including 28 policy recommendations, that concluded there is “a clear need for intervention” on pension and savings advice, to make it more available to the estimated 16 million people who need it.

“People often find it difficult to engage with financial matters and we need to make it easier for them to do so,” said the FCA’s acting chief executive, Tracey McDermott.

The Financial Advice Market Review recommended establishing a unit to help companies develop automated advice and drive down costs. As part of that it plans to widen the definition of “regulated financial advice”, so firms can offer cheaper robo-advice or guidance services.

A guidance service aimed at people with £50,000 or less in their pension pots could help 60 per cent of households prepare better for their retirement, according to savings industry body TISA.

The report also recommended letting people access a small part of their pensions pot to pay for advice. It rejected the notion put forward by the financial services industry of a 15-year “long stop”, effectively a deadline for claiming for receiving poor advice, “as this would inappropriately limit protection for consumers on long-term products”.