Four fifths (80%) of financial advisers have said they believe the introduction of Consumer Duty has made it harder for them to service more clients, the lang cat has revealed.

The advice gap study, which featured YouGov research among 2,000 British adults, also included fieldwork by the financial consultancy involving over 200 financial advisers.

The study revealed that just 9% of people now pay for financial advice, down from 11% in 2023. The lang cat added that this is despite of Consumer Duty, which was introduced last year to provide better outcomes for consumers.

The lang cat found that this was impacting those with low investable assets, with over half (55%) having stopped serving these clients as a result. The consultancy said the findings suggest that many advisers have used the new regulation as an opportunity to rationalise their client numbers.

The requirement was introduced by the Financial Conduct Authority (FCA) to ensure that services and products are targeted at consumers, for whom they are most suitable for and ensuring fair value. This has created a sharper focus on wealth customers approaching and transitioning through retirement.

However, the lang cat added that "on the upside", the data shows that of those who pay for advice, 91% find it is helping, an increase of 14% in the past two years. Over half (56%) said they valued the service and more than a third (37%) said taking the advice provided gave them with peace of mind about having enough money in the future.

Consulting director at the lang cat, Mike Barnett, said: "Consumer Duty has triggered a major overhaul of the advice sector. The requirement to have a clearly defined target market, and represent fair value, has naturally resulted in advisers ensuring they offer their services to those with the most assets and complex needs.

"This is not a criticism of the profession- in fact it makes complete sense. Advisers run businesses; they are not paid to deliver social policy. However, change is required to ensure more consumers can access financial advice and support when needed.

"Our research shows that the FCA’s work on the advice guidance boundary review is broadly supported by the advice sector, albeit the majority of firms will not develop new services alongside their existing ‘full advice’ offerings. Whoever forms the next Government must ensure the FCA accelerates this work from consultation to final policy. This means consumers who are unable to access traditional advice, can get some help with their increasingly complex financial lives."

---