Insurers call for cheaper advice

A new breed of simpler, cheaper financial advice is needed to serve consumers in the wake of reforms, the Association of British Insurers has said.

The group fears many people will be unwilling to pay for independent financial advice once new rules from the Financial Services Authority come into force.

The FSA's Retail Distribution Review has called for the introduction of adviser charging, whereby independent financial advisers levy an up-front fee, rather than take a commission from product providers.

The ABI agrees with the principle, and says it will remove any bias, whether real or perceived, and help rebuild consumer trust in financial advice.

But the group, which represents insurers, fears many people will be unwilling to pay for what they got for free in the past.

To avoid this, the ABI has proposed the development of simplified advice processes to meet the needs of consumers who are unable to afford, or do not require, full advice.

Maggie Craig, the ABI's director of life and savings, said: "As we get closer to the introduction of RDR reforms in 2012, the FSA must realise that firms need clear rules and guidance now.

"Given direction, firms can develop simplified advice processes, ensuring as many people as possible have access to financial advice."

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