The Treasury and the FCA are to carry out a major review of financial advice to establish how the market can function better for consumers.
The review will be supported by an advisory panel led by Scottish Widows chair Nick Prettejohn and will look at efforts to bridge the advice gap and the obstacles preventing the growth of affordable advice.
It will cover products including pensions, annuities, savings, mortgages and insurance. Initial work will be done over the summer with a consultation in the autumn.
Final proposals are envisaged ahead of the Budget in 2016.
The review is expected to generate plans to better establish a broad-based financial advice market, create a clearer regulatory environment and devise a set of principles to govern the operation of advice.
It will also consider the proportionality of rules, and the implications for the affordability and availability of financial advice, taking in the roles of the FCA, the Financial Ombudsman Service and the Financial Services Compensation Scheme.
Treasury economic secretary Harriett Baldwin says: “Making sure that our financial services sector supports working people at every stage of their lives is a key part of our long-term plan.
“That’s why we’ve launched a major new review to explore what more can be done to make sure consumers can access high-quality and affordable advice so they can make informed decisions with their hard-earned money.”
Association of British Insurers director general Huw Evans describes the review as “a welcome step”.
He says: “The new pension freedoms have highlighted how important it is that proper advice is accessible to all, not just those who can afford it.”
The Government will also launch a further consultation later this year on how the state-backed guidance available through Pension Wise and the Money Advice Service can be made more effective.
The MAS is currently undertaking its own review process, after an independent report recommended a dramatic overhaul of its services, while the announcement also comes two weeks after the Work and Pensions Select Committee announced plans to investigate the affordability and availability of financial advice upon parliament’s return from recess in September.