GOVERNMENT officials and regulators are today launching a new review aimed at improving consumers’ access to financial advice. However, experts say that the answer to the so-called “advice gap” is likely to be found in new financial technologies such as automated online portfolio managers known as “robo-advisers”.
Robo-advisers are most common in the US, where they face scrutiny from the Securities and Exchange Commission just like any human financial adviser. Andrew Power, a London-based partner at Deloitte, told City A.M. yesterday that well-regulated automated systems could provide sound advice to British consumers.
The FCA has faced criticism in recent years that its Retail Distribution Review programme, intended to improve consumer confidence, has effectively priced out individuals with smaller net worth from accessing professional financial advice.
But with recent changes to pensions schemes – including automatic enrolment and new pension freedom rules giving savers greater control over their portfolios – expected to boost demand for financial advice, the government will today announce a new review with the City watchdog.
It will “examine how financial advice could work better for consumers” and “ensure the regulatory and legislative environment allows and encourages firms to innovate and grow their business models to include affordable and accessible financial advice”.
A consultation is set for the autumn, with a full report due before next year’s Budget.