The UK
financial regulator says it is looking at the issue of people being no longer
able to get access to advice in the wake of tougher regulations brought about
by the Retail Distribution Review, media reports said.

The chairman of the Financial Conduct Authority, John
Griffith-Jones, said the watchdog is monitoring the issue “extremely closely”
and recognises industry concerns over its impact. He was speaking at a
conference held by the Wealth Management Association, which has re-branded from
its previous name, the Association of Private Client Investment Managers and
Stockbrokers.

The issue of clients “orphaned” by the RDR is one that this publication,
among others, has flagged for some time. When WealthBriefing interviewed the
FCA over a month ago (see here), it was asked about what it thought of any advice gap. As
regulatory costs mount, some firms, such as HSBC and AXA in the UK have cut
some of their advisory channels.

Arguably, such cuts are, other things being equal,
inevitable when a regulator imposes tougher controls on a sector. The RDR,
which took effect at the start of 2013, outlaws trail commission payments to
advisors and imposes higher standards of professional training on the wealth
advisory industry. Ahead of the RDR’s introduction, some industry figures said
as many as 20 per cent of UK
independent financial advisors will disappear; however, recent FCA data suggests that this has not happened, although re-registration of advisors may have skewed the data. One advisor to IFAs, Brian
Spence, recently told this publication about his fears. (To see that interview,
click here.)

“Clearly there has been a concern of the impact even if the
nature of wealth management revenue streams has had slightly less impact than
other areas of the industry. I would argue that what we have now is very
clearly an improvement over what we had before,” Griffith-Jones was quoted as
saying.

“Yes, there may be side effects or unintended consequences
and over the coming months we at the FCA will monitor developments in the
market extremely closely. In particular we are alert to the advice gap issue
and actually very interested to see where you, as part of a very competitive
market place, go for new solutions that might meet the advice gap customer
needs,” he is reported to have said.

As reported previously, the FCA is also reviewing the sector
of execution-only platforms that are seen as becoming more popular as advisory
channels of wealth management become more expensive due to regulatory and other
costs.