Millions of Britons are currently floundering in tempestuous financial seas, often prey to scams and rip-offs without access to regulated advice, presently the preserve of a few people in the know or those with substantial cash, (usually at least £50,000).
What this means is that nearly everyone is left to navigate choppy waters alone.
It is time for a new halfway house of foundation advice serving ordinary workers while protecting the high standards we have come to expect from most independent financial advisers, who give regulated advice with perhaps an extra-special quality kitemark, and more signposting and promotion of their virtues by the regulators.
The present system of an advice/guidance boundary, more or less in place since the introduction of the Retail Distribution Review in 2012, no longer works in my view.
Indeed, since then, George Osborne’s grenade of freedom and choice blew apart the whole edifice of the RDR and its rationale.
A new era of personal responsibility in retirement began in 2015 without either the regulatory framework or appropriately empowered institutions.
The burgeoning mass-market created by the auto-enrolment reforms has only compounded this "help gap".
Not before time, the whole murky boundary of guidance and advice is being revisited with a review underway by the Financial Conduct Authority and HM Treasury.
Not a whisper as I write has been heard from them on the outcome of their joint review on the advice/guidance boundary, promised for theautumn.
Pension neglect
The current guidance and regulated advice divide has led to millions neglecting their pensions during their working life for want of adequate communications and possibly making wrong investment and tax decisions, which companies are unable to correct as they fear straying into dangerous advice territory.
Not surprisingly, financial institutions are far too cautious about overstepping the mark as, quite rightly, negligent personal recommendations can lead to criminal sanctions or litigation.
But worse still, a help gap can leave millions seeking the illusory security of cash for the long term with their savings decimated by inflation.
Few do-it-yourself investors, even experienced ones, have any sophisticated concept at all of risk. They are either too gung-ho or risk-averse and need their hands holding, or at least more financial education.
The Pensions Policy Institute estimates there are currently just over 12m people in the UK at state pension age or older. This will rise to just under 16.5m by 2050, while the over-75s are set to increase by 50 per cent.
Older people are especially vulnerable and few take advice. With a majority retiring with decent final salary pensions, advice was just a "nice to have" luxury. Now, in the new defined contribution paradigm, it is almost an essential.
Without appropriate reforms from the FCA and Treasury, more pensioners will be scammed.
Scammers have no compunction about straying into regulated advice territory. If you make it hard to access regulated advice, too many unsuspecting individuals will simply fall into their lap.
