Wealth manager trade body PIMFA has called for radical reform of the advice sector to reach more consumers.
It is urging the industry, Government and regulators to work together to increase access to financial advice.
It says the latest surveys reveal a woeful lack of consumer usage of financial advisers.
PIMFA has published 12 recommendations in its Future of Advice policy paper to reshape the advice sector.
It says recent findings show 90% of consumers have never taken paid-for financial advice and 79% of those who had not taken advice had no intention of doing so in the future.
Some 62% of consumers believed they did not need help in managing their money.
Among the barriers to consumers using advisers are a lack of trust in the advice profession, a lack of awareness about the value of advice and the cost of getting advice.
Regulatory costs are also pushing up the cost of advice too making it even more unaffordable, says PIMFA.
The 12 recommendations in the policy paper call for:
- A review the definition of advice
- A review the regulatory perimeter
- The approval of financial promotions to become a regulated activity, and stronger regulatory controls in relation to the exemptions for high net worth and sophisticated investors
- Improved online consumer protection from financial scams through the Online Safety Bill
- Effective implementation of the financial capability strategy
- Promotion of the value of advice and the financial advice sector
- Effective sign-posting to advisory services to be put in place
- The creation of new lower cost advice services to provide effective financial advice to a wider market
- Provision of a regulatory framework to support such a simplified advice service
- A review of the Handbook to ensure a clearer, effective, proportionate and cost efficient regulatory environment
- A review of and improvements to the FCA supervisory regime
- Promotion of high standards of behaviour and competence across the sector to increase professionalism
PIMFA will be lobbying Government this year on its plans and talking to stakeholders across the industry, consumer groups and the regulator to ensure that economic harms are included in the upcoming Online Safety Bill to provide greater protection to consumers from financial scams.
Liz Field, chief executive of PIMFA, said: “There is now more than ever, an increased need for financial and investment advice and support, but most people still don’t engage with financial advice, seeing it as an expensive service for the well-off.
“PIMFA believes that access to advice should be an affordable option for everyone in the UK.
“Advice plays a pivotal role in a well-functioning financial services landscape, providing individuals with the support they need to navigate their financial journeys, as well as providing access to products and markets they would not be exposed to otherwise.
“PIMFA is committed to broadening consumer access and to creating the best environment for the financial advice and wealth management profession to deliver their services and meet their clients’ needs.”