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Personal Finance Society
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HM Treasury definition of advice consultation

Response from the Personal Finance Society

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.

Pdf icon small  View our attached consultation response »


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