Despite calls for its return from many advisers, the Financial Advice Market Review has closed the door on plans to reintroduce commission as a way to tackle the advice gap.

In January 2016, a Government appointed panel of experts — who are advising the FCA in its Financial Advice Market Review — was revealed to be considering the idea of returning to commission as a revenue source for advisers. This news was then supported by FCA interim chief executive Tracey McDermott on the BBC Radio programme Money Box where she acknowledged the regulator “would not rule out an element of commission in sales” provided there were suitable safeguards in place.

CoreData’s own research reflected the split in view on its return with more than half (53%) of advisers saying they would make either “slight” or “significant changes” to their business model to use commission as a revenue source.

Two months later and the FAMR has rejected the possibility with the final report, published in mid-March stating: “Given the strong arguments against a commission-based system, such as the lack of transparency and distortion of incentives, FAMR does not believe there is a case to consider this, and is therefore not recommending a return to commission-based financial advice.”

To encourage more customers to pay for advice, the FAMR instead proposes allowing people to access a portion of their pension pot early. This seems like more of a shot in the dark as opposed to a well-thought out plan to tackle the growing advice gap which is the biggest unintended consequence of the RDR.

Calls for new technologies by the review are hardly something new. In fact, much of the proposals appear to be telling advisers how their businesses can be more efficient within the current rules and regulations. This is not what is needed. What they do need is a way to access the mass market and build trust with consumers.

As many advisers have predicted, banks appear to be the big winners as a streamlined advice approach — coupled with an extension to the deadline for trainee advisers to become qualified — are being offered as fillets to tempt banks back into the advice game. The review recommends staff are given four years, up from 30 months, to become fully qualified to advise without supervision.

The British Bankers Association says the review will allow banks to help consumers make informed decisions.

The question is, has the FAMR actually changed anything?  Advice still costs around £150 an hour, something most consumers are not willing (and in many cases not able) to pay for upfront, particularly as it is a segment of the market they do not trust. Unless these problems are met, advisers look set to lose out as banks and robo-advice firms continue to make inroads into the mass market segment.