The Treasury and Financial Conduct Authority (FCA) are launching consultations into robo-advice and free guidance provision as means to close the advice gap.
The consultations will launch simultaneously on Monday and will form the first step of the wider Financial Advice Market Review (FAMR), which was launched on 3 August and seeks to explore how access to advice can be "radically improved".
The advice consultation will focus on the questions:
• What kind of financial advice do consumers want?
• Are there gaps between the financial advice that consumers want, and the financial advice that they can access and afford?
• How can these gaps be closed?
• What role could technology, such as "robo-advice", play in improving access to financial advice?
The guidance consultation will consider how the government should structure the provision of free, impartial guidance, including that given by the Money Advice Service (MAS) and Pension Wise, to give consumers the information they need, either to make financial decisions directly or to seek the right additional advice to help them do so, the Treasury said.
The two reviews will provide a complementary and comprehensive analysis of the advice landscape, it said.
FAMR builds on the government's pensions freedom and choice reforms, which have radically altered the at-retirement space for the masses, allowing many unfettered access to their savings for the first time.
The reforms created a 'safety net' for consumers in the form of free impartial guidance service Pension Wise, which is being delivered by The Pension Advisory Service (TPAS) and Citizens Advice, however uptake has been low.
The advice consultation will be open until 22 December before a final report will be published ahead of Budget 2016.
It will be supported by an external expert advisory panel comprising of industry and consumer voices, with Nick Prettejohn as chair.
The Treasury said initial evidence gathering will have a broad scope before narrowing down to consider those areas where the advice gap may be most acute.
Separately, the MAS, which does not provide face to face guidance but has been playing a supporting role, was subjected to a government-backed review earlier in the year and is currently working at implementing its recommendations, which include a radical reduction of its budget.
The FAMR is being led by Charles Roxburgh, financial services director general at the Treasury and Tracey McDermott acting chief executive of the FCA.
McDermott said: "The financial decisions people make can have long reaching effects. It is important that the market provides accessible and affordable advice when people need it.
"The review is a chance for the FCA, government, industry and consumers to work together to ensure we can deliver a market that meets this need."
Prettejohn said: "It is vital that the financial advice market meets the needs of consumers to enable them to make informed financial decisions at all stages of their life. I am pleased to have been asked to chair the expert advisory panel of industry and consumer voices, to contribute ideas that I hope will improve consumer access to financial advice.
"I look forward to working closely with my fellow members of the expert panel and with Treasury and the FCA."
Hugh Savill, director of regulation at the ABI, said: "The new pension freedoms, which are designed to give people more options at retirement, have highlighted how important it is that financial services firms are able to offer consumers the support they need, in a way that suits their individual circumstances.
"It's good to see all forms of information and guidance will be considered by this wide-ranging review, which the ABI has wanted to see for some time.
"In particular the potential role of technology must be looked at, alongside the implications of future regulatory and legislative change."
Further reading:
FCA to set PPI deadline after detecting 'false claims'
