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Consumer Panel member wants FCA fines to fund national advice service

A member of the Financial Services Consumer Panel has argued money collected through FCA fines should be used to fund a national advice network to help bridge the post-RDR advice gap.

Speaking to Money Marketing, Consumer Panel member Teresa Fritz cites the not-for-profit organisation The Pensions Advisory Service as a good example of the kind of guidance service which could be “upscaled” to provide generic information for people who cannot afford advice.

Fritz, who has worked for over 35 years in financial services, including as a principal researcher for consumer organisation Which?, says: “One idea could be funding a service like that through the fines the FCA makes on companies. If you think about how much the FCA collects in fines every year from the industry, why can’t they go into funding a national advice network?”

Fritz argues that funding from FCA fines could build a quality guidance service, potentially as an additional layer of the Money Advice Service.

Fritz adds: “[This kind of service] could get people up to a point where they understand what product they have to buy, and explains they now need to speak to an adviser to see which provider to buy from.

“That information would then ideally be passed to an adviser of the consumer’s choice, who has even less to do because they are getting an educated and empowered consumer, as well as a fact find. Advisers can then take them on the last bit of the journey at a very low cost.  That is the ideal picture.”

Hudson Green & Associates principal Ian Hudson says: “It would be nice to see fines used to drive value for the consumer to help get them further down the advice process at a cheaper cost.”


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There are 24 comments at the moment, we would love to hear your opinion too.

  1. Why not try a different tack instead of imposing more costs on financial services and bureaucracy – why not try cutting the level of administration and costs in an attempt to attract new financial advisers into the industry.

    The reasons why there is an advice gap is that the number of financial advisers authorised to give advice has fallen off a cliff.

    Simply increasing the size of industry funded quangos providing poor levels of advice is not the answer. The entities in place to provide high quality advice already in place, it is the individuals who need the advice who do not necessarily have the funds to do so – maybe some form of financial advice aid just like legal aid is required.

  2. I agree with what Peter Herd has said, and I would also like to know a bit more about Teresa Fritz’ qualifications and experience of financial services. I do ot regard working for the consumer panel or ‘Which’ as real experience in financial services. She may have good experience but I would like to have known what it was.

  3. How about funding the FCA/FSCS AND FOS via these fines. This will reduce the costs to industry and our regulatory requirements in terms of proper and useful RWL that actually mean something to clients, not maintaining the rain forrest of paper that is needlessly required under current system. Never mind funding yet more “advice centres”. Isnt it amazing how every one and their dog wants a pience of us?

  4. Probably in a minority of one, but I take the view this would represent a positive step.

  5. ….but I think someone has already earmarked the fines income to pay for his failed economic policies.
    Ms Fritz’s idea is sound , though I’d perfer it to go further and provide proper full advice do that the Regulator can continue Sir Hector’s crusade to rid the world of IFAs in private practice, come to think of it couldn’t any money left over be used to employ more supervisors in the Small Firms division of the FCA? Or a few extra policy folk to devise some more regulatory returns?

  6. Firstly, what is MAS for? If not this, then it is a pointless organisation! (I know many of you think it already is). So why would another organisation (with attendant costs) be required? Unless of course Ms Fritz fancies getting herself on that as well for some more pocket money.

    Secondly. being a “principal researcher” for Which does not make her any kind of expert.

    How would PI Insurers and FCA view an adviser just recommending a company based on a fact find done by some one else, who’s qualifications and liability for that advice/guidance would be what?

    How would a client use “an adviser of their choice?” They would use this service because they don’t have an adviser how would they then get one? Would it be recommende by this service? WOuld large nationals then get all the benefit?

    As usual a soundbite with no understanding of how it works and no thought. She would do well as pensions minister!

  7. The whole fines system is just tax by the back door.

    Large fines are paid by shareholders not the miscreants themselves. Until fines are the personal and uninsured responsibility of those who materially breach compliance rules the wrongful activities demanding those fines will continue. At the moment there are profits and bonuses if dodgy practices pay off with no personal downside if they don’t.

    Oh – unless of course you are an IFA…

  8. Basically flawed, just imagine the utopian dream when, in any year the FCA didn’t fine anyone,or fines were at a low figure who pays then? Fluctuated income can’t sustain a quango ( unless of course your the FCA in which case you do as you damn well please and charge regardless)

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