The FSA has been asked to develop a pathfinder scheme to launch in early 2009 which could bring advice to one million consumers.
The FSA clearly sees it as a key part of the future structure for consumer financial capability. Many in the industry have struggled to see where it fits as there is great misunderstanding about what is planned, perhaps lessened by the dropping of the term “advice” and replacing it with the more accurate term “guidance”.
This is partly as some people see Money Guidance as a subsidised threat to the advice market (and which the industry will be expected to part fund) while others do not believe that it will happen, despite an all-party consensus for the principle and need for such a service. Such scepticism is understandable but short-sighted. The more the public are informed and able to discuss their issues in an impartial environment, the better.
A scheme called Moneyplan, which has many of the characteristics of a face-to-face financial guidance service, already exists. It is run through selected Citizens Advice Bureaux with pro bono support from members of the Personal Finance Society and funding provided by Barclays and Aegon. The scheme is now in its second phase after an eight-month pilot in 2005. The project aims to investigate the potential for meeting the identified gap for such guidance, encourage the development of skills in local bureaux and contribute to the wider debate in these issues.
At a recent celebration event to acknowledge the valuable work provided by over 38 volunteer IFAs working with 30 bureaux around the country, Chris Pond, the director of the FSA’s financial capability team, described Moneyplan as a “ground-breaking initiative” and acknowledged that there are valuable lessons to be drawn from the project which in its second phase has already seen nearly 600 inquiries dealt with. PFS president Robert Reid observed that there is already good evidence (even though the project does not complete until March 2009) that those who use the service are taking action as a result.
Moneyplan has shown the strong need for some form of financial information and guidance service, beyond that of crisis or debt advice for which there is already existing provision, not least within CAB, which helps the public seek information about the complex world of financial services and hopefully helps them take the important step to seek advice or buy appropriate products.
It is clear that there is a need for such a service but there is much still to be done to convince many in the industry that this is a positive development and a workable scheme can be developed to increase the public’s knowledge and help them navigate the complex world of financial services, ultimately producing a flow of business to the advice sector.
A win-win situation? It should be. Moneyplan shows that consumer demand is there. Let us hope that there is sufficient momentum to see it through to fruition.
David Thomson is director of policy and public affairs at Chartered Insurance Institute