The Personal Finance Society (PFS) has backed comments made by Andrew Bailey, chief executive of the FCA, and Charles Randell, chairman of the FCA about the need to simplify the parameter between regulated and unregulated activity.

In response to comments made by the pair at a Treasury Select Committee hearing this week, Keith Richards, chief executive of the PFS, said “action was vital to ensure that firms cannot play the system to avoid responsibility for advice they give to consumers, which will ultimately protect the best interests of the majority”.

Mr Richards said: “It is a theme that we have been stressing repeatedly, most recently in our response to the FCA consultation on the evaluation of the Retail Distribution Review and the Financial Advice Markets Review.

“In our response we said: “One unwelcome trend [in the market] has been a growth in scams, in particular around pensions - highlighting the need to police the perimeter of financial advice very vigilantly.

“We agree that firms that appear to give advice, but claim to give only information, should be regulated according to the spirit rather than the letter of the rules, and if firms are giving the impression that they are giving advice, they should not be allowed to avoid responsibility for that advice because of loopholes in the regulatory parameter.”

He added: “It cannot be right that regulated professionals who do perform to high professional standards should be tainted by the activities of firms that do not behave in an ethical way, and who, in addition, do not contribute to the cost of compensation and regulatory supervision.”