The Government plans to offer free financial advice to all adults in the UK within the next five years and the Treasury has enlisted the help of Aegon UK CEO Otto Thoresen to devise the service.
The aim will be to provide generic advice which could also link with existing providers and IFAs. The service is estimated to cost around £50m a year using websites, phone services and new and existing advice services provided by the Government and industry. The main focus will be on those lower-income groups the Government believes would benefit most with the aim of launching before the set-up of personal accounts.
The potential problems are huge. How will it sit alongside existing advice and perhaps more particularly existing regulations? What if a new national generic advice network found itself advising against membership of various NPSS personal accounts in large numbers?
The greatest concern surrounds the flawed logic that saw any mention of advice in submissions about personal accounts ignored while suddenly advice seems to be a priority.
The most cynical will see this as another move to exclude advisers coming on the back of all manner of suspicions about their alleged tendency to missell from people in high places like the Treasury.
The challenge for the industry must be to find a way to influence the new structure.
The need is to construct something that is cheap, effective and does not undermine the existing network of paid-for advisers.
It will need a skilful design to create something that makes a difference to overall levels of poverty and increase financial capability. Generic and basic advice are concepts that have been talked about for years but have never seen the light of day in any meaningful manner.
But it will also need great care to ensure that, in the process of providing free advice, in particular to people who are less well off, the scheme does not undermine existing advisers and ultimately mean that free advice for all leads to less advice for most people.