LLOYDS Banking Group will next month join Barclays, RBS and HSBC in restricting investment advice to its wealthiest customers, ahead of the ban on adviser commissions from January 2013.

Lloyds says customers "with less than £100,000 of investable assets will be able to access a non-advised service through Halifax, Bank of Scotland and Lloyds TSB".

It follows similar moves by Barclays, HSBC, and RBS, which has closed its financial advice arm but which has announced a tie-up with Standard Life to offer a range of investment options in compliance with the new regime.

It means the big banks have abandoned their traditional investment advice service for ordinary customers, effectively admitting that it depended on sales commissions.

Nationwide building society will offer an investment advice service to all customers through a "single-tie" agreement with Legal & General, whilst continuing to offer a whole of market annuity service as well as "multi-tied" protection advice to all customers.

The moves reinforce industry worries that the retail distribution review (RDR) reforms will leave a swathe of mid-market customers without any obvious source of advice on more complex products, particularly investments. Stuart Falloon at consultants Mercer said: "As individual IFAs disappear as well, I don't know where the man in the street is going to access financial advice."

Under the RDR reforms, only advisers qualified to level four can offer independent advice, prompting industry bodies to call on the Financial Services Authority to allow advisers with level three qualifications to offer basic advice. A group including the Association of British Insurers and Association of Mortgage Intermediaries says less qualified advisers should be allowed to advise on basic protection products, cash and equity Isas, stakeholder pensions and annuities up to a certain level of pension fund. They would be paid by commission but the products would be designed by the industry and approved by the regulator.

Doubts about the effectiveness of the new regime emerged this week when the FSA wrote to the chief executives of leading financial companies warning them not to work round the ban on commissions.

The FSA said it had been alerted to payments and benefits typically included within distribution agreements. They might mean that "advisers continue to provide 'biased' advice to consumers when recommending a product provider and also make some firms' adviser charges look lower than others".

But for those prepared to pay a financial adviser, or do it themselves, the regime should offer more transparency and a level playing field for good-value funds, including investment trusts.

Ian Sayers, director general of the Association of Investment Companies, said: "Whilst it would be naïve to expect an immediate transformation, RDR represents the single biggest long-term opportunity the investment company sector has seen."

Ed Morse, head of investment trust business development at F&C, said it was "a significant opportunity for investment trusts to enter a level playing field with open-ended funds when the payment of commissions to advisers is finally consigned to history".

But James de Sausmarez, director and head of investment trusts at Henderson Global Investors, said it was "disappointing that the principal fund platform providers have so far been lukewarm in facilitating the inclusion of the full range of investment trusts on their platforms".

The Alliance Trust Savings platform was commended this week in a report by Edinburgh-based consultancy the Lang Cat. The report cites ATS's unique flat rate charging model, with no percentage-based product or platform fee, and says that even after raising its prices modestly it is still "cheaper than just about everyone" for any but the smallest portfolios.