Financial advice market review calls for new pensions and guidance shake-up

The long-awaited Financial Advice Market Review highlighted a "clear need for intervention" in the UK's financial advice industry as it was released on Monday.

The FAMR report, conducted by the Treasury and Financial Conduct Authority (FCA), recommended the government allowed consumers access to a chunk of their pension pot to use against the cost of retirement advice.

"This will ensure that consumers can access financial advice at a key milestone in their lives, and feel confident in making financial decisions as they approach retirement," the report said.

It added this would allow millions of Britons better access to financial advice, at an affordable level.

The report also urged Westminster to explore improvements to the current income tax and National Insurance exemptions for employer-arranged pension advice, and recommended the government narrow the definition of regulated financial advice to leave firms more scope to offer guidance to customers.

"This would create a single definition for regulated financial advice, and remove some of the barriers that exist for firms wishing to offer guidance services," it explained, calling on the Treasury to consult on such changes.

FAMR found the cost of providing face-to-face advice under the current regime, which requires financial advisers to charge customers for their services instead of taking fees for selling products, meant it was generally not financially viable for firms to advise clients that had smaller amounts to invest or who had simple requirements.

However, the report ruled out a push for a 15-year stop on advice complaints, saying it would "inappropriately limit protection for consumers on long-term products".

The cost of advice could also be lowered significantly through the use of technology establish a unit to help firms develop their automated advice models, it suggested, with the FCA encouraged to extend the work of Project Innovate.

"The package of reforms we have laid out today will help increase both the accessibility and affordability of the advice and guidance to ensure that consumers get the help they really need when they really need it," said FCA chief Tracy McDermott.