The Association of British Insurers (ABI) has said the Financial Services Authority's (FSA) stance on simplified advice means members are unlikely to develop propositions in the area.
The regulator yesterday issued final guidance on simplified advice and, despite calls from within the industry for a relaxation on the rules around qualifications, the need to assess consumer debt and complaints procedures, it was left largely unchanged.
Predicting many consumers would be left without advice post-RDR, Maggie Craig, director of financial conduct regulation at the ABI, said the guidance left the problem unresolved.
"The simplified advice model was a collective industry effort to find a workable solution to this problem, so we are disappointed by today's FSA guidance, which effectively makes the model unlikely to work in practice," she said.
"The ABI is committed to the principles of the RDR to make charges for advice clearer and help restore consumer confidence in financial products.
"However, customers should be able to access and afford financial advice that is appropriate for the products they purchase, and without a workable model for a more simplified advice process, we could see the advice gap further exacerbated."
Despite the concerns, Peter Smith, head of investment policy at the FSA, said there was still evidence of firms interested in providing simplified advice.
"We still see some appetite and the extent of interest has risen and fallen over the months," he explained.
"There are still some who are an upslope in terms of their interest rising, and some on a downslope.
"No doubt, some of that is to do with the regulatory framework, some of it is to do with how their businesses are doing and the general economic situation."
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