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The Financial Services Authority (FSA) must clarify its position on restricted and simplified advice, a group of MPs has said.
The House of Commons Treasury committee said changes to the way in which financial advice is given and products sold should be delayed for a further 12 months.
The FSA must devote significant resources to educate customers about the retail distribution review (RDR) and the meaning of restricted advice, the report said.
It recommended a further year in the implementation of the proposals into the regulation of retail investment advice, in an attempt to stem the flow of advisors leaving the industry.
The committee expressed concern that a "substantial exodus of experienced advisers" could harm consumer choice.
It also criticised the FSA for its decision to move the level four qualification benchmark and said more time was needed before a move to level six.
And it called on the financial regulator to provide some flexibility for advisers on a case by case basis.
Committee chair Andrew Tyrie said: "The FSA is right to reform the financial advice market.Given the past problems of mis-selling we welcome the banning of commission and the introduction of a clear market price for advice.
"However, the current timetable for reform risks putting large numbers of experienced financial advisers out of business.
"In the interests of consumers we are calling on the FSA to delay the RDR by a year to give advisers more time to take the qualifications and comply with the rules."
The FSA has said it is committed to its current timetable, for the RDR to come into force on January 1 2013.
The Chartered Insurance Institute said it continued to support the objectives of the RDR, with a need for trusted and high quality professional financial advice to encourage a culture of saving amongst consumers.
It said: "We believe that what is required now is a concerted effort to ensure that advisers are supported to be 'RDR ready'.
"Our estimates show that only 1 in 5 consumers currently aware of the RDR changes, we reiterate our call on the Money Advice Service to lead a consumer campaign, with industry and regulatory support, to inform the public of the merits of the RDR."
In June, the CII carried out research suggesting that 33 per cent of those who do not currently take financial advice would consider doing so once the RDR changes were explained to them.
Dods Parliamentary Communications Ltd
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