Balls points to trusted and affordable advice

Treasury Economic Secretary Ed Balls believes that raising financial capability on its own is not enough and the role of “transparent, trusted and affordable” full financial advice must be promoted.

Speaking at the UK’s first Financial Capability Conference, Balls said at present financial planning is the “preserve of the better off”.

He said key questions, such as how to increase access and take-up of generic advice, who is best placed to deliver it and who should determine and monitor standards need to be addressed.

But Balls said as financial products will always be complex and advisers always more knowledgeable than consumers, regulated financial advice will always be part of the jigsaw.

He said he welcomed FSA chairman Callum McCarthy’s Gleneagles speech on the problems with the current distribution model and the launch of the regulator’s review of distribution.

Balls said: “We must acknowledge that raising capability on its own is not enough. Financial products will always be complex, producers will always know more than the average consumer. We need full advice that is transparent, trusted and affordable.”

Balls also used the conference to highlight the Government’s 10-year strategy for financial capability and said the Government needed to do more work to be clear about how ambitious the goals should be and what role the voluntary and financial sectors should play.

FSA chief executive John Tiner said financial capability, along with the environment and obesity, was one of the three major issues facing today’s society.

Tiner said: “Three years ago, the term financial capability had not entered the consciousness of policymakers, let alone the lexicon of the financial services marketplace.

“But today we have started to make a difference to people’s lives and our challenge is to capitalise on what we have learned and to reach out effectively those most in need.”

Aegon chief executive Otto Thoresen said the industry had a moral obligation to participate in the “vital work” that needs to be done to improve financial capability and empower customers.

Thoresen said: “Good financial advice can substantially change people’s lives and futures. Our industry has a vital role and a big contribution to make to creating better futures for the people of this country.”