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An education in advice

Kim North

A few days after April fool’s day, the Consumer Finance Education Body rebranded as the Money Advice Service, offering free, clear, unbiased financial advice.

If this service was aimed at and committed to only helping the “coping classes”, I would welcome the initiative with open arms. A Friends Life report issued last week says 59 per cent of middle-income households would be unable to provide for themselves and their families for longer than six months if they lost their main source of income and over half of people unemployed in the UK have been so for over six months.

This group makes up one in five UK working adults in the UK and this group shops around to reduce their debt to help them survive the effects of the downturn.
The Money Advice Service, however, offers workplace information to companies, including Rentokil, Capita, UK Police and Marks & Spencer. Not exactly industries with minimum wage and lacking in benefits.

In order to provide the workplace “advice”, existing advisers get one day of Money Advice Service training, then go into the workplace to deliver financial information.

Once the presentation is finished, the employee has the adviser’s business card and is likely to call him or her for proper client-specific financial advice. The Money Advice Service does not provide advice, it is education. It would be interesting to see who these advisers are? Are they QCF level four and whole of market IFAs? Or restricted advisers? Or a combination of both?

It worries me if tied advisers are dishing out their cards in the workplace under the guise of a Government-backed free advice service. It is not advice, it is education and unless it is delivered by a whole of market IFA, it is not unbiased.

And it is not free, as regulated financial services companies pay a fee to run the service. It is beyond me why the service is funded by £43.7m from financial services firms regulated by the FSA. It should be funded by Government money.

I would love to be able to redirect a £43.7m annual budget to, say, who year after year have over half a million people seeking an IFA and generate more than 7,000 positive press mentions a year for IFAs. All this on an annual budget of £2m.

Why should IFAs freely listed on pay for the Money Advice Service, especially as it is in competition for corporate clients such as the police and Marks & Spencer?

Informed Choice expects to pay £900 towards the cost of funding the enterprise this year. Martin Bamford’s blog on the issues states a “better name for this project would have been The Money Guidance Service. There is a world of difference between advice, which is specific and regulated, and information or guidance.”

I am relieved that Aifa director general Stephen Gay says he believes independent advice will remain the gold standard as members await a decision on whether the trade body will admit restricted advisers after the RDR.

Please can Aifa just lobby on behalf of IFAs in the future and not for restricted advisers with a handful of company ties as there is a world of difference in the needs and activities of independent and restricted advisers. These differences are what the Money Advice Service should consider.

Kim North is managing director Technology & Technical


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. I wonder what the FSA would do to me if I stopped giving financial advice and only “educated” clients, accepting execution only instructions and not being tickets to level 4 QFC?

  2. There is no way we should be paying for this.
    The government should foot the bill. It is a total disgrace.
    Consumers who see this as a government run scheme will be shocked to realise that the “advice” they eventually receive may not be unbiased and may not be in their best interests, in fact it may not even be advice. Trouble is how will consumers figure this out amidst all the confusion?
    MAS prides itself on the usage of plain English, by using the word advice it fails miserably.

  3. As others have said we are not a Public Service and this should be funded by Government not by private companies and businesses.

    This is just another tax on our businesses and quite frankly is an abuse of power.

  4. I must admit to not having been aware that restricted, according to the FSA, will mean multi-tied. I may be wrong, but I’d thought that restricted is going to mean advisers or firms that don’t advise on every type of financial product known to man and explore in detail the pros and cons of every conceiveable product and provider for every single client who comes their way ~ all at commensurately colossal cost, of course. This, of course, will mean that a percentage somewhere in the high 90’s of all advisers who currently consider themselves independent will, from 2013 onwards, have to call themselves restricted.

    Life in the real world is somewhat different. Is it really the FSA’s intention to force the vast majority of those who are presently IFA’s by any reasonable definition to call themselves restricted after 2012? If so, it seems quite likely that most of the public will be deterred from seeking advice either because they’ll dislike the connotations of the term restricted or will blanche at the prospect of what independent advice, as newly defined, is likely to cost them. And that’s progress?

    That aside, I too agree that the MAS, as a government initiative, should be funded by the government.

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