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A consuming opportunity

I was surprised and delighted to see the major initiative launched by the Consumers&#39 Association which actually might take the advice market forward.

Oh dear, I am aware that many of you will now have stopped reading. I have used the dreaded CA words.

The CA&#39s Advice for Life campaign makes the usual overtures towards the intended CA audiences but its conclusions should be read carefully by anyone who wants to see a future for an independent sector as you can be sure it will be read well as by those in Government.

The CA is calling for a national financial advice network to offer generic advice on a range of low-level needs. Advisers would be called general financial planners and would offer the delivery of basic financial healthchecks, debt advice, and some kind of diagnosis of financial problems and initial recommendations.

In the case of complex work, there would be a ref-erral to, in many cases, the IFA community. But this is where the IFA community needs to start some thinking.

How would the system work? The CA is proposing three major levels of delivery. First, community-based solutions through Citizens&#39 Advice Bureaux and other advice agencies for example, second, through the workplace and finally, through the existing financial services distribution.

It is this third area that needs to catch IFAs&#39 attention as this is the kind of idea which will lend itself to Government and regulatory thinking.

The whole area of social exclusion is one that the Prime Minister in particular has been especially keen to promote.

Aifa has welcomed the CA&#39s proposals but it and other bodies representing the advice sector should go further and do so quickly. This might mean developing a series of practical proposals to mesh the CA&#39s thinking with the practical delivery of such an advice network.

One of the image problems that the independent advice sector has always had with this Government is that it only serves the high-net-worth community. Does it not? Of course not. The fact that a lot of IFAs undertake work in Citizens&#39 Advice Bureaux or provide generic advice free to thousands goes unreported. Or the fact that most IFAs sort their clients&#39 debt or personal financial issues for free before going on to offer positive solutions.

The fact that this perception remains among policymakers has, in part, led to the whole review of polarisation.

Practically, the independent sector is best placed to help deliver much of the Advice for Life agenda. Perhaps Aifa and the CA should get together to see just how the proposals could be made to work.

In terms of policy development, this would mark a major contribution from the consumer lobby and the independent sector coming together to secure a future for advice.

All this sounds, on the face of it, to be a similar proposition to the one floated by Liberal Democrat spokesman Vincent Cable in autumn 2001. However, in policy terms, the CA has put some more flesh on the bone and this idea comes with some important backing.

First, these ideas are being proposed by the consumer lobby – which has some important friends in the Government, as can be witnessed by the consumer agenda at the heart of the FSA&#39s approach and remit. Second, the fact this is a proposition from a non-party political organisation will make this much more attractive in terms of Government thinking.

Of course, there remains the perennial question of how will it all be paid for? As a recent Money Marketing editorial comment declared: “If the private sector is to be harnessed to help close the savings gap, whatever size the gap may be, then it must be allowed to make a profit.”

This is a valid issue. The concept of a product levy has been around for years but does not seem to find favour with the industry or with the Government&#39s stated aim of a 1 per cent charging culture.

Perhaps some Exchequer support might be offered for the FSA to fund such developments through its consumer division but the squeeze on the Chancellor&#39s purse strings will become more evident as we see the outcome of the Government&#39s strategic spending review in the summer.

Perhaps a genuine public-private partnership is the answer. To launch the scheme – if the independent sector as well as product providers were to be prepared to fund a kickstart in activity – planning, marketing, rollout and dissemination – then the Government could match that funding with ongoing support for the advice network funded through the FSA.

Many voices may call all this dumbed-down advice. In fact, not advice at all. Perhaps it is. However, it does represent some enlivened thinking on how to move the mass market towards getting advice.

The fact that many thousands who might just have walked into the arms of the banks or towards direct sales might now start down the journey of looking for advice has to be a step in the right direction.

When I first read the CA document, I started with some scepticism. There is a lot of detail to be filled in. However, this could be a major opportunity for the true advice sector to engage fully in the challenges faced after polarisation.

Iain Anderson is director and chief corporate counsel at Cicero Consulting


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