The Financial Services Authority has responded to widespread concerns that the Retail Distribution Review (RDR) will prevent many consumers from seeking financial advice, as it released a long-awaited consultation on simplified advice rules.
The regulator stated that the adviser charging rules would just make the price of advice more explicit and not more expensive and inaccessible to those on lower incomes.
According to the consultation paper: "There may be consumers who are currently receiving advice that decide not to seek advice in the future, when the price of the service becomes clear and they compare this with the benefits they derive, but they would still be able to access investment advice should they want to.
"If consumers cannot afford an upfront payment for advice when purchasing a regular contribution product, they will be able to pay back the charge as regular payments over time through the product."
The FSA said the aim of the 27-page guidance was to reduce any regulatory uncertainties that may be discouraging firms from offering simplified advice services. Yet the FSA admitted even if it created a regulatory regime where more firms were willing to offer simplified advice, consumers would not necessarily seek this assistance.
The regulator stated: "The availability of simplified advice services would not guarantee take-up by consumers".
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Guidance Consultation
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