ABI calls on providers to develop online simplified advice

Providers need to develop online simplified advice to respond to the needs of 30 million adults currently unable to afford financial advice, according to the Association of British Insurers (ABI).

The ABI said its research shows that advisers could only profitably work with consumers who had more than £257 per month to save, or £13,730 to invest as a lump sum.

The cost of full advice was driven by the time spent on research by IFAs with most on average spending more than nine hours on a pension case, according to the ABI.

The ABI proposed that a simplified advice process based on pre-determined questions should take no longer than 45 minutes.

It said simplified advice should focus on protection, cash and share ISAs, group personal pensions and annuities.

Consumers currently unable to access financial advice or those squeezed out of the market as a result of the retail distribution review should be the target audience for simplified advice, said the ABI.

It said simplified advice should sit between full advice, execution-only sales and guidance from the FSA's Money Made Clear or Money Guidance schemes.

The ABI said there was consumer demand for simplified advice and industry support but it was being held back by uncertainty over how it would be treated by the Financial Ombudsman Service.

'The industry requires clarity that any complaints would be judged based on the limitations as explained to the consumer,' said the ABI.

ABI assistant director Peter Jolly (pictured) said five providers were currently piloting a simplified advice service.

Jolly added that individuals involved in simplified advice should not need to be qualified to QCA level four. 'We use the word facilitator...simplified advice is a process not a person.'