The AJ Bell research was published as the FCA consultation on proposals for 'core' or simpler investment advice closed yesterday.

The consultation is aimed at encouraging the estimated 4m people with ‘excess cash’ to invest for the long-term rather than leaving money on deposit.

Advisers who said they would not offer core advice said they were more focused on helping wealthier clients, or the likely fees were too low.

They also mentioned that they were already full to capacity or were concerned over liabilities as reasons behind their lack of interest.

The key features of the proposed core advice regime include simplifying the customer ‘fact find’, limiting the available investments to a narrower range and restricting advice to ISAs worth £20,000 or less.

They also include making qualification requirements “more proportionate” to reduce the cost of delivering advice for firms and allowing advice fees to be paid in instalments.

However, AJ Bell warned that focusing on transactional advice risked creating a culture focused on product sales rather than encouraging good long-term outcomes.

The firm also warned that the transactional nature of core advice may lead to large numbers of orphan clients. It also said that consumers may struggle to differentiate between ‘core’ and ‘holistic’ advice and fail to recognise when they needed full holistic advice to meet their needs.

It is instead calling on the FCA to set out clearly its plans for the review of the advice/guidance boundary.

It said the review should focus on addressing factors which unnecessarily increase the regulatory burden on advisers, thereby raising the cost of giving advice and preventing it being accessed by more people. It wants more focus on enabling the delivery of more help and support to non-advised customers through guidance.

Tom Selby, head of retirement policy at AJ Bell, said: “The regulator’s ‘core advice’ reform proposals are extremely limited in nature and, at worst, could risk poor consumer outcomes if firms are effectively encouraged to flog products rather than focus on providing ongoing advice.”

He said there is a real risk that encouraging core advice will lead to poor consumer outcomes.

He said the FCA envisages charges for core advice sitting somewhere between £100 and £200 - "the only way this could be made to work economically would likely be if huge volumes of sales were pushed through, most likely via major banks," he said.

He added: “This creates a fairly obvious danger that we could see a return to a product-sales focused environment, which in turn increases the risk of mis-selling.”