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FAMR working group to recommend keeping ‘advice’ and ‘guidance’

The terms “advice” and “guidance” should be kept but come with an explanation of the difference between the two, the Financial Advice Market Review’s working group is set to recommend.

Money Marketing understands the group’s report, which is due to be released in the next few weeks, will not call on the FCA to scrap the words altogether because there are no clearer terms available.

But the group wants wording introduced during the advice and guidance process to clarify what each term means, such as whether there is Financial Services Compensation Scheme protection.

A source who has seen draft reports from the working group says: “The group did consider whether the terms should be replaced, but they’ve basically found through consumer testing that there is nothing better.

“But they’re both poorly understood. Consumers didn’t really know the difference, didn’t understand what kind of protections they are getting with advice that they are not getting with guidance, but the group couldn’t find a way of describing those things.”

“The group’s recommendation is to stick with the labels, but there would be some kind of uniform way of describing both advice and guidance. It’s unclear what exactly the description would be to explain you are not protected by the FSCS, or your decision is with a recommendation that someone else has liability for.

“They want to put forward a proposal, which would be tested by someone like the Money Advice Service, that there will be a requirement for any firm offering advice to upload at some point, but they’ll have to decide at what point is has to be disclosed.”

New nudges

The FAMR working group was formed in June last year. It is chaired by Scottish Widows chair Nick Prettejohn, and its 15 members include outgoing St James’s Place chief executive David Bellamy, Nutmeg director Nick Hungerford and Legal & General savings director Jackie Noakes.

The working group was tasked with publishing a shortlist of potential new terms to describe guidance and advice, but also designing a set of rules of thumb and “nudges” to try and increase consumer engagement with advice and developing a guide for employers to support the financial health of their staff.

The shortlist of advice and guidance terms was due to be published in either the third or fourth quarter of 2016. A revised timetable of the end of March was then given, with the report to be presented to the FCA and Treasury imminently.

Money Marketing understands the working group is also ready to finalise some of its nudges and employee financial health recommendations.

Phrases such as “pile into your pension” are being touted as ways to communicate the tax advantages of saving into a pension, while the group is also looking at cues that would break down the stigma around seeking financial help, be that through a debt charity or a financial adviser.

The source says: “They’re keen to promote the idea that lots of people already get help, and that you shouldn’t feel it’s not available to you as well.”

The working group is also set to put forward a blueprint for employers to white-label as an online financial help resource for their employees.

This could be sent to employees in one-off events like receiving a bonus, for example, to suggest potential savings and investment strategies, with the hope being the large employers will sign on at an early stage to encourage more to adopt the working group’s blueprint.



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There are 15 comments at the moment, we would love to hear your opinion too.

  1. More
    Money on a pointless refresh of a brand that matters not to the public or the profession- easy when it’s not your own I guess

  2. Perhaps we might be better protecting consumers rather than nudging them!

  3. Look up the word ‘guidance’ in Rogets Thesaurus, and the first equivalent word is ‘advice’.
    In other words, they are synonymous, or for our beloved FAMR working group members – these words mean exactly the same thing! So please stop tinkering around the edges and adding more and more confusion to an already totally confused public who don’t give a damn.

  4. Reading Money Marketing today just makes me want to take early retirement!

  5. You could not make it up if you tried, Yes Minister, I have been told was Margret Thatcher’s favourite TV programme, as she stated it was more like reality then many wished to admit.

  6. well this FAMR has been going on for ages very similar to the treasury select committe all wind and no decisions and a lot of nice lunches paid for by us seems we have been nutmeged again by a scottish widow

  7. I am seriously depressed by this complete and utter waste of time and money.

    I imagine the next task of this committee will be to design a camel

  8. Play them at their own game 4th April 2017 at 9:42 pm

    How many on the FAMR panel have ever actually BEEN advisers?
    Of those who have been, how many were advisers for more than one round of “selling” to clients before they went in to management?
    Most advisers who stay in the business provide an ongoing service to their clients and ongoing advice, not sales followed by promotion.

  9. How come it is always the people in the top jobs, who cannot make decisions without advice, that always get these cushy jobs. Why don’t they for once advertise these jobs more widely and people in who actually get to speak directly to the public.
    The decisions made would then be incisive and meaningful instead of being afraid to make a decision.

  10. Why not “Advice” and “Information only”? Or is that too blindingly obvious?

    • Seems a sensible suggestion. Information is exactly that – clear cut, the facts only, no added views opinions or anything else. As soon as you have to start explaining what “guidance” means to Jo Public they, rather like the rest of us tend to lose the will to live.

  11. Unlike other commentators here, I think that it is very important that the difference between guidance and advice (from a regulatory perspective) is clarified to consumers. It’s not that consumers don’t care, it’s that they don’t understand the difference and that advice is a different process that has a superior outcome.

    My only issue is that I (and any other adviser) could have told the FCA all of this in 15 minutes over a pint and a packet of crisps, rather than consulting a room full of people who have never given regulated, face to face advice and taking months to come to a decision that is blindingly obvious.

  12. I stopped reading after “The terms “advice” and “guidance” should be kept but come with an explanation of the difference between the two, the Financial Advice Market Review’s working group is set to recommend.”

    Says all you need to know about our regulator. If only an explanation was needed then you wouldn’t have needed to review it in the first place.

  13. Surely something more sophisticated than “pile into your pension” could be selected to persuade the public to understand the tax advantages of pensions savings?!!!

  14. I agree with the above comments, such a waste of money. FCA should consult with real advisors who deal with real client confusion of the regulations daily. Why not label the respective options as Protected Advice and Unprotected Guidance.. Disclaimers on liability work in other consumer industry products and services so why not FS. Car salesmen are not sued if a buyer drives the wrong way up the motorway at 100 miles hours and crashes. I think everyone should receive bespoke advice and pay for it on a agreed remuneration out of the product. Advice gap solved.

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