Widening of the advice gap is 'unintended consequence' of regulation such as consumer duty, advice firm boss has warned.
In a newsletter to clients, Philip Hanley, founder of Philip James Financial Services, said while the consumer duty was welcome, there were always problems in its wake.
According to Hanley, the effect of the consumer duty has been to see some advice firms become more exclusive than even before, potentially widening the advice gap.
He said: "This might sound a bit financial-adviser-nerdy, but is a reminder that the Law of Unexpected Consequences should always be expected when brave new policies are introduced.
"Our regulator introduced something called ‘consumer duty’ last year, which required both advisers and providers to review their businesses and ensure they have ‘a clearly defined target market’ for whom their products and services ‘represent fair value’."
However, he said many companies had, as a result, decided they could not "be all things to all types of clients", and that they should perhaps focus on fewer and charge accordingly for the service provided.
Hanley said: "All this means the much-discussed advice gap widens, and is likely to continue to widen.
"To paraphrase a memory of a previous election, things don’t, necessarily, always get better."
His comments followed an article in FT Adviser, which reported on the latest findings from Lang Cat research.
The report from the consultancy found the advice gap in the UK has been widening, with less than 10 per cent of the population having benefited from paid financial advice.
It found the number of people paying for advice has fallen from 11 per cent to 9 per cent in the past year, despite the introduction of the FCA’s consumer duty.
