The Personal Finance Society recognises the government's
implicit endorsement of the benefits associated with more people
being able to access information, guidance and advice in respect of
their financial needs.
We support the Treasury in seeking to clarify the boundary
between regulated advice and guidance and, in so doing, provide
greater certainty to allow firms to be confident in their
development of both guidance and advice services. We believe
that this will be an essential enabler to increasing access to
savings and investment services to better address the needs of the
public and in a way, that meets their expectations.
Mitigate the increasing risk of mis-buying and scams:extending
the scope of guidance to address entry level or less complex
savings and investment needs will help consumers make better
informed decisions and protect them from the increasing risks of
'mis-buying' and scams. We believe, however, that only authorised
firms committed to an agreed set of standards should be allowed to
provide 'extended guidance', especially if it is to include
arranging products on behalf of the consumer.
We are particularly concerned at the growth in both scams and
'mis-buying', which will further impact public confidence and trust
in the financial services framework, because consumers are unlikely
to recognise the difference, and in turn, will do little to
underpin a balanced return to a national savings culture.
Consumer protection:consumers should be able to rely upon
minimum standards from any firm or individual offering financial
guidance, coupled with appropriate levels of protection. However,
this should not simply be viewed from the perspective of when
advice or guidance doesn't meet a future expectation which has
significantly restricted access to regulated activity. The
consequence of not being able to access guidance and advice is
leaving the public vulnerable, often providing no option but to
fend for themselves, increasingly susceptible to fraudsters, or
with the belief that they can depend on the Welfare State.
For consumers who either don't require full advice or can't
afford it, guidance offers significantly greater protection than
unregulated activities - addressing this issue and the growing
social exclusion from accessing advice, or guidance is a matter
which can't continue from a public interest perspective.
If the cost of regulation and, in particular, the FSCS were to
be addressed via the introduction of a transparent product levy, it
would be feasible to extend protections for guidance in a similar
way to advice. We believe that a product levy collected in a
similar way to Insurance Premium Tax (IPT) would also provide HMT
with funding to support better financial awareness, promotion and
education, in addition to providing a pooled compensation fund.
We would not want to see guidance operated outside of an
authorised firm. This could, of course, be an authorised firm
offering guidance only.
View our attached consultation response »