Government to introduce free financial advice paid for by the industry
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The coalition Government will launch a free national financial advice service funded in full by the industry in the form of a social responsibility levy.
The Conservative Party proposed the measure, which it estimated would cost £50m a year, as part of a range of economic commitments in February. Business Secretary Vince Cable (pictured) has campaigned for a network of free advice in the past
When the Tories announced plans for the £50m advice service, a party spokeswoman said the service would offer consumers impartial advice on money matters via face-to-face sessions, telephone advice and online advice. The spokeswoman said the service is about encouraging people to seek further advice and IFAs would have a role to play in the process.
She said: “It is about encouraging a culture where people do pro-actively seek financial advice. We think this would work quite well alongside IFA advice.”
The previous Government committed to launching a Money Guidance service by 2011 with a £20m roll-out cost. This was to be shared between industry and the Government with the Government ear-marking money received through reclaiming dormant accounts to help fund the project.
The free advice service is included in the coalition Government’s agreement, published today, which also includes plans to introduce a new banking levy, tackle “unacceptable bonuses” and help the flow of credit to SMEs.
The document also confirms the coalition Government will press ahead with Conservative proposals for a new financial crime agency to tackle white collar crime.This would take over economic crime responsibilities from the FSA, Serious Fraud Office and Office of Fair Trading.
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Readers' comments (63)
Shocking | 20 May 2010 10:55 am
Is this new government actively trying to rip apart the cornerstone of the UK economy - our financial services????
Aparently under the Con/Lib coalition there will be such a thing as a free lunch.
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terry | 20 May 2010 10:56 am
There are various issues to this.
1. Will the people giving advice have to be qualified to level 4.
2. If the advice is wrong, can action be taken against them.
3. If there is loss due to the advice who will pay the compensation.
4. Do people not think that IFA,s are hit enough with charges from the FSA and the FSCS bearing in mind I have just received another bill for the Key Data etc. We are not a bottomless pit to be tapped into when people feel like it.
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Martin Bamford | 20 May 2010 10:59 am
This is not a threat to independent financial advisers, unless of course your business model is to say 'yes' to every prospective clients, cross-subsidise massively the cost of your services between different clients and act as if you are providing 'free' advice.
Critics of the RDR should welcome this announcement as it will help to deal with one of their main objections, that some socio-economic groups will lose access to advice as a result of RDR changes.
It will be very interesting to see how this will work in practice, although we should welcome the news as it will help to ensure that every member of society can receive impartial advice at some level.
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Anonymous | 20 May 2010 10:59 am
£50 million this year then £75 million next and so on....what a colossal waste of money. This will fail miserably until such times as we educate young people of the need for financial planning. Wonder where we do this.....oh yes schools! If every child should left school with a basic understanding of the tax system, retirement planning then possibly this will work, until then more money down the toilet.
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Tricia Campbell | 20 May 2010 11:01 am
I hope the people giving this advice will have to sit the same exams we have been sitting for the past number of years!
I think a lot of thought needs to go into this or the country could end up in a worse mess than it is already!
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IFA Charity Shops | 20 May 2010 11:04 am
We pay taxes and VAT to the Government.
We pay for the FSA.
We pay for the FSCS.
and we are now expected to give free advice under what is to be branded a social responsibility levy?
Interesting prospect for the future!!!
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Ian McKenna | 20 May 2010 11:05 am
Previous points about qualifications and responsibility for advice are well made but if this helps address consumers who under the new regime cannot afford IFA services could it not be a good thing. At least IFAs could point such cases in the direction of the national service with a clear conscience and focus on clients who can afford their services.
In practice will this not become a national debt counselling service? For how many people is the right answer, pay off your debts first. Hardly a message you can follow up with "Oh and here is a bill for my advice"!
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Anonymous | 20 May 2010 11:07 am
"IFAs will have a role to play in this" That means the bill will land on our desks!
I have just about had enough of being treatred like a cash cow by various governing bodies.
Do doctors or dentists have to pay a social responsibility levy from their salaries? so that their clients can receive advice not to smoke or drink or eat too many sweets?
We can expect no more support for IFAs from this government than the last. In fact while it stands up and pretends to be helping small business it will be thinking up even more ways to extort money from us.No doubt it will tell us tomorrow that the FSA will need more of our money to continue the state interference in our lives.New Politics? Old tricks more like.
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Stephen | 20 May 2010 11:08 am
Sorry Terry, but yes we are a bottomless pit to be tapped into by all and sundry until we all go broke which is driven by the banks. The CONservatives said if they get in to power the fsa will be scrapped, any pigs flying around yet ? As for the IFA playing a role in so called free advice well, does everyone not expect us to work for nothing anyway ?
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Anonymous | 20 May 2010 11:08 am
Depressing idea from the new Government ... not really thought through. Sign of things to come?!
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