The Personal Finance Society has renewed calls for the Government to remove the term 'advice' from all branding, marketing and communications associated with the formation of its new single public financial guidance body.
In its submission to the Government's public financial guidance consultation, lodged on Monday, the largest professional body for the personal finance profession argues the persistent use of the 'advice' label, when referring to guidance activities, continues to confuse consumers and the general public.
It suggests the creation of a new single guidance body offers the perfect opportunity to clearly differentiate the services offered by the new body from those offered by a regulated professional adviser, by aligning terminology and using the term 'advice' only when specifically referring to regulated financial advice provided by a professional financial adviser. Personal Finance Society Chief Executive Keith Richards said;
"We have consistently called for terminology that is consistent with the service being offered and more intuitive for consumers to understand. Guidance which may signpost consumers to regulated financial advice when required should not be called advice. Any promotion of services offered by the new guidance body must be clear, accurate and not misleading, and we have to make it clear that guidance is not advice in the regulated and qualified sense. It is important not to mislead consumers into believing that they will be receiving regulated financial advice, which carries full consumer protection with it."
The Society argues that while some consumers might theoretically see the term advice in a broader sense than the regulatory definition, in practice the broader use of the term actually creates confusion and misapprehension, especially when guidance is the service being offered.
The Society's calls for clarity date back to 2014, when chief executive Keith Richards wrote to both the Money Advice Service (MAS) and The Pension Advisory Service (TPAS), recommending they replace the word 'advice' in their names with 'guidance', to portray their service more accurately from a public interest perspective.
As well as seeking further clarity of terminology, the Society is also urging the new guidance body to:
- Instill trust and confidence in the financial advice market by positioning guidance as a signpost, not a substitute, to the retail financial services market;
- Bridge the gap between public guidance and regulated advice by implementing a statutory objective to work more closely with the financial advice sector, including facilitating follow-up actions with the sector.