The Economic Secretary to the Treasury has this morning espoused the power of robo-advice as a means to bridge the advice gap.

Harriet Baldwin, speaking at an industry forum on the Financial Advice Market Review, said that high quality automated advice had great potential to bring affordable options to the mass market.

She also pledged to make good on the Budget move to change the definition of advice to aid consumers and help eradicate confusion.

Ms Baldwin said: “I am a big believer in the potential for technology to have a significant impact on the supply of advice.

“I was delighted when last month the UK was ranked as the world’s leading fintech hub, according to an independent report by EY.

“High quality automated advice has the potential to help bridge the advice gap by bringing affordable options to the mass market. There are already a number of excellent examples on the market, for example LV=’s CORA.”

She acknowledged some firms have had fears over regulation, preventing them bringing models to market, but said the FCA will provide regulatory support for high quality robo-advice propositions that will have impact on the mass market through a new ‘advice unit’.

Regarding the definition of advice, she said: “I know how frustrating it is – for firms and customers alike – when there’s uncertainty about the boundary between “regulated advice” and “guidance” when all people really want is help.

“That is why we committed at Budget to consult on changing the definition of financial advice so that it reflects the EU definition of advice as a “personal recommendation”, and we will consult on this over the summer.

“I hope that this will do away with the current confusion surrounding multiple definitions, and enable firms to do more for their customers.

“I hope that the development of a new streamlined advice regime will also enable advisers to give affordable advice focussed on specific needs, without conducting a disproportionately long and expensive fact find.

“I am confident that these measures will give firms the flexibility to bring forward innovative new guidance and advice offerings, so that consumers can select a service that meets their individual needs.”