He said that banks had tried to find ways to offer advice economically to their customers for two years in the run up to the Retail Distribution Review (RDR) once they realised the new charging models would be economically unviable for them.
But unclarity from the regulator around simplified advice, combined with pressures brought by the financial crisis, stopped them from investing in new the business models they were not sure about.
Once given a clear steer from the regulator, simplified advice could attract all sorts of entrants, from advisers to banks and companies such as Google or Amazon, Miller suggested.
He said: “Banks will definitely come back at some point. It was never the intention of RDR for banks to drop out [but] they realised the new charging model wasn’t going to be commercially viable for them.
“Had there been greater clarity [from the regulator] it would have helped the banks. We will see the banks stepping back into this market, as well as new entrants.”
Miller added that although the then regulator the Financial Services Authority (FSA) had identified the need for simplified advice at the time, it was not able to identify any model that felt suitable for the RDR proposition.
Banks and building societies saw a huge decline in adviser numbers in the past half year, from 4,604 at the end of July 2013 down to 3,556 advisers at 10 January this year.
Financial Conduct Authority (FCA) chief executive Martin Wheatley said on Monday that he was surpised by the scale of bank retreat following the implementation of RDR.
He admitted the regulator should have foreseen the emergence of an ‘advice gap’ whereby the RDR priced some people out of advice.
But he said he didn’t think there was anything the regulator “could have done realistically that would have accelerated and fast-tracked the necessary business development and innovation that had to happen in the industry”.