The FCA and HM Treasury announced the reviews this morning as it seeks to address problems for consumers who lack enough wealth to pay to see a regulated adviser.
The Financial Advice Market Review will examine how financial advice could work better for consumers, particularly in the light of the recent changes to pensions and the pledge for free and impartial guidance.
Officials said the aim was to “create a regulatory environment which give firms the clarity they need to compete and innovate to fill the advice gap”.
The review will come up with proposals and report ahead of Budget 2016, having considered all types of retail financial products including pensions, savings, mortgages, and insurance.
A set of principles will be produced to govern the operation of financial advice.
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There will be measures to ensure standards of behaviour for firms within all types of financial advice markets are “in accordance with those principles”.
Officials said the MAS and Pension Wise will come under the spotlight later this year to see how they can made be more effective.
The review will:
• examine the advice gap and how to encourage a healthy demand side for financial advice, including addressing barriers which put consumers off seeking advice.
• ensure the regulatory and legislative environment allows and encourages firms to innovate and grow their business models to include affordable and accessible financial advice
• consider ways to encourage people to seek financial advice, addressing unnecessary barriers that currently deter them
The review will come forward with a package of reforms designed to “empower and equip all UK consumers to make effective decisions about their finances".
Economic Secretary to the Treasury Harriett Baldwin said: “Making sure that our financial services sector supports working people at every stage of their lives is a key part of our long term plan.
“That’s why we’ve launched a major new review to explore what more can be done to make sure consumers can access high quality and affordable advice so they can make informed decisions with their hard-earned money.”
The review will be led by HM Treasury and the FCA. An expert advisory panel comprising of industry and consumer voices will be chaired by Nick Prettejohn, Chair of Scottish Widows.