A new nationwide advice network funded by the industry or the taxpayer should be set up to help fix the problems causing the advice gap.

That is the proposal from The Financial Inclusion Centre, which has published a report on the subject of lack of access to financial advice.

The think-tank also suggested creating what it called ‘portable fact finds'.

This would mean that consumers when switching to a new adviser could take a collection of basic financial information, which has already been paid for in the advice process, across.

The report stated: “We support the creation of a National Financial Advice Network to provide advice, guidance, and information to consumers who are not commercially viable for the for-profit financial services industry.

“This must involve some form of cross-subsidy either from the public purse or from the industry.”

This idea was originally proposed by Which? in 2002. The original report suggested using proceeds from fines levied on financial services companies to fund the new network, therefore ploughing the money back in to the system to benefit consumers.

A ‘portable fact find’ would be an important and useful innovation, the authors of the report said.

They stated: “There is a cost involved in collecting basic financial information on a prospective consumer’s financial circumstances. If a consumer moves to a new adviser (or from a non-profit adviser to a regulated adviser) there is no point duplicating the collection of that information if his/ her financial circumstances haven’t changed much.

“So we can see merit in allowing consumers to take the ‘fact-find’ with them to a new adviser. This new adviser should be allowed to rely on that fact-find to provide advice – providing, of course, that the information is relatively current and the consumer has confirmed that there have been no changes in basic financial circumstances.”

The report also addressed the “real reasons for the advice gap”.

The think tank said these were firstly “growing numbers of consumers simply cannot afford to save and invest, or pay for for-profit advice”.

Secondly, large numbers of consumers are ‘underserved’ by the financial services industry because the industry is still too inefficient to meet their needs, it said.

The report stated: “In other words, the advice gap can be explained by the economics of access and distribution, not over-regulation.

“The barriers to advice are primarily economic, not regulatory. We must take great care not to reduce regulatory protection in a misguided attempt to encourage the provision of advice to consumers who are currently not commercially viable for or under-served by the financial services industry.

“In our view, the industry would still not be interested in serving lower-medium income consumers. Instead, the industry would continue to serve medium-higher income consumers but with weaker constraints on its behaviours.

“The overall effect would be to just transfer the risk of mis-selling to consumers which will undermine confidence and trust in financial services.”