Pension industry professionals have called for “brave and bold” moves, as the Treasury and FInancial Conduct Authority's (FCA) joint consultation on plans to narrow the advice gap draws to a close.

The FCA and the government were seeking views from a range of stakeholders on proposals to close the advice gap, which sees too few people seeking financial advice, particularly in lower income brackets. The deadline for responses is today (28 February).

Responding to the discussion paper, Aegon said that it backed “targeted support” as the intervention most likely to reduce the current advice gap and challenged the government and regulator to be “brave and bold” when bringing in changes.

Aegon offered five reform points: a focus on “core consumer needs” such as Isas, pensions and protection, to the exclusion of complex or risky areas; availability of advice from adviser firms and benefit consultants, not only manufacturers; help for customers make the best use of existing products, as well as suggesting possible new purchases; proactive and not reactive provision of advice; simple disclosures to explain the service and help compar with other forms of advice and support.

“The advice guidance boundary review offers a real opportunity for progress in closing the highly persistent advice gap.

"A triple whammy made up of difficult economic conditions, people living longer and individuals having to take on more personal financial responsibility means regulated advice has never been so valuable and must be encouraged to thrive,” Aegon’s pensions director, Steven Cameron, said.

“But millions of individuals are stuck between the ‘rock’ of holistic advice with a substantive price tag and the ‘hard place’ of generic information which doesn’t encourage engagement.”

Cameron added: “For targeted support to be truly game-changing, the FCA and Treasury need to be brave and bold. This middle ground support will never offer the optimal personalised solutions of holistic advice.

"But it could be a big improvement for the millions who currently get no – or no tailored – support whatsoever.”

Isio director of reward and benefits, Jen Norris, echoed the call for tailored advice.

“If done correctly (holistic and specific to the individuals’ circumstances and employment benefits package), […] provides clarity and confidence to the individual, often avoids the need for full advice, and is cost effective for the masses,” Norris said, citing differences in advice requirements in line with gender, age, ethnicity and socio-economic backgrounds.

Meanwhile, the Society of Pension Professionals Financial Services Regulation Committee chair, Jasmine Smiley, called the move a “step in the right direction”.

She added: “SPP believes that further clarifying the boundary could be helpful for some, including pension trustees, and that a new targeted support regime, which sits between guidance and regulated activity, could create an opportunity for many firms to be able to better support consumers if properly considered and carefully implemented.

“We also support simplified advice in principle, but more information is needed to ensure that it offers consumers value for money.”

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