Simon Read: The financial services industry is now warning about a massive 'advice gap', but what advice do you need?

Have you heard of a thing called the Retail Distribution Review? Unless you work in financial services, I doubt it. It comes into effect at the turn of the year and effectively changes the way that financial advisers get paid.

In short, it will mean that instead of relying on commission paid by the firms which supply the financial products they flog to you, advisers will have to charge you a fee.

There's a lot more to it than that, of course. But I don't want to bore you with the tedious ins and outs of RDR – as it's known in the industry – that have been debated ad infinitum in financial circles for many months.

But as we approach the date of the rule change, there are more and more warnings about an "advice gap" that will leave people without adequate help in deciding what to do about their finances.

The latest to land this week was from the beancounters Deloittes. The accountancy firm claimed that some 5.5 million people will become financial advice orphans following the introduction of RDR on 1 January 2013. Why? Because they will either be unwilling or unable to pay the new adviser fees, which could be charged at up to £250 an hour.

As a result "a third of customers could start doing their own financial planning, product research and administration to avoid paying for advisers," Deloitte notes with horror.

I don't get this. Are there really millions of people who use the services of a financial adviser who will stop once they're confronted with a fee? I don't think so. People who use advisers tend to be either well off, or those reaching a financial crossroads, such as because they've come into a legacy or need help with retirement planning.

Don't get me wrong, there's a real role for decent financial advisers and there are many around the country. If you can afford to use one I'd recommend it. Indeed I've sought and been grateful for help myself on several occasions.

In fact they can help people avoid being taken for a ride, as happened in the case of the Essex independent financial adviser Steve Adams recently. One of his clients told Steve – who works for Positive Solutions – that he had been approached with the offer of a one-year Investec corporate bond paying 8.1 per cent a year. It was a tempting proposition, but Steve's experience told him the deal was bogus, which it proved to be. Without his involvement, the client would probably have handed over tens of thousands to the dodgy firm – and lost the lot.

Steve is obviously the kind of adviser who's useful to have on your side. But the idea of people making their own financial decisions is one that I welcome.

They need to be informed decisions, of course, but there's a wealth of useful information and advice around to help people decide what to do with their cash. The downside is that if you do follow your own advice, you'll have no one to blame but yourself if things go wrong!

Last week I wrote in this column about debt advice and how the poor are left out in the cold when it comes to finding crucial help. The Money Advice Service subsequently wrote in to admonish me for suggesting that it isn't helping those with debt woes by spending its millions on a clever little website.

In fact the service – which gets millions from the finance industry, not from the Government, as I mistakenly wrote – says it gives free debt advice to vulnerable people "on the phone and face-to-face in over 1,000 locations".

I'm happy to put the record straight, but will reiterate that the amount of advice offered to the nation's hard-up is woefully inadequate. The service admits that, saying: "The Money Advice Service cannot fill the enormous advice gap (19m) in the UK by ourselves and so work with partners to support people in crisis."

Of course I support any efforts to help those in debt, so am grateful for others who have written in about different activities around the country. Please continue to send them in. I want to be able to report on as many initiatives as I can.

Finally, I would like to thank reader Deb Finey, who writes in with an interesting suggestion of how to raise the much-needed cash to fund the essential debt advice that's needed around the country.

She points out that all the cash raised by the Financial Services Authority from the multimillion-pound fines it has imposed on rule-breaking banks, insurers and other City firms is used to reduce the cost to other companies of registering with the FSA next year.

"Given that the FSA may be investigating those other firms for the same sorts of issues, it doesn't seem appropriate they should benefit from the fines already paid," she says. "Instead I would like to see the money donated to a fund to help pay for debt advice." That sounds a very sensible solution!

s.read@independent.co.uk