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Gillian Guy: Advice gap solutions may lie outside the private sector

GillianGuy-50 (to be used with picture credit - Copyright Ian Enness)

As it considers submissions to the Financial Advice Market Review the Government won’t be short of evidence and expertise on whether the advice gap exists, and if so what it looks like and how best to tackle it.

Money Marketing’s lead article last week reflects the crucial insight and diversity of views across the industry about the presence (or not) of an advice gap.

For Citizens Advice, the Financial Advice Market Review is a real opportunity for the Government to make sure people are getting the right support to plan and manage their finances.

While the cost and availability of independent financial advice must be central to the debate, it is also important to consider how other forms of money advice can better meet people’s financial management needs.

Citizens Advice this week published its final advice gaps report (the last in a series which identifies four advice gaps). It reveals that up to 23 million people aren’t getting preventative advice which could better equip them to adapt to changing financial circumstances and ensure a secure financial future.

As it stands, people are nearly 50 per cent more likely to get help for a debt problem than with general money management. But at the same time, consumers say they would appreciate help around financial planning or money management if it were offered at key times in their lives, like when starting a family, entering the world of work or moving into self-employment.

This kind of timely money advice would not only help people get to grips with changing financial circumstances and considerations for the future, like childcare costs and life insurance when starting a family for example, but could also reduce the risk of running into financial difficulties later on and recognise how regulated advice can help at different stages of their lives.

The latter is nothing new to Citizens Advice. For over seven years we’ve been running a project with the Personal Finance Society matching people who have had money or debt help from local Citizens Advice with independent financial advisers in their area for free, introductory advice on savings, mortgages and insurance.

This link between two types of advice has helped people build their financial management skills and understanding of how different products and services can provide protection and security for the future.

Our evidence on the advice gaps has found that while the price of advice can be a barrier, people also face challenges including a lack of awareness of what help is available and where to get it.

This means there is a real opportunity for free-to-access and paid-for advice providers to acknowledge the different needs people have and work together to make sure services are built with these at their very core.

As the Government considers its next steps following FAMR, it must understand people’s different money advice needs and recognise that not all of the answers lie in the private sector.

Gillian Guy is chief executive of Citizens Advice

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Comments

There are 6 comments at the moment, we would love to hear your opinion too.

  1. And who will pay for this ‘free’ advice?

    Not all people can afford to have their car serviced on a regular basis – maybe that should be free as well?

  2. `For over seven years we’ve been running a project with the Personal Finance Society matching people who have had money or debt help from local Citizens Advice with independent financial advisers in their area for free`
    That`s news to me! – has any IFA ever been matched by CAB to a worthwhile paying client in their area ?

  3. This is presumably a Pro Bono scheme, where an IFA gives up their time to do free work. Which, when it boils down it means that really it is a cross subsidy from clients who pay for the advice. Otherwise you wouldn’t be able to take time off to work for free!

  4. Totally agree, the Government needs to take ownership of something and perhaps this is one area where they can deliver a return to taxpayers…But by utilising tax revenues to deliver an advice/guidance service to the taxpayer and not compulsory industry levies.

    I am sure that there is not a compulsory levy on supermarkets to fund a guidance service for sales of goods act-related matters advised upon by CAB, so why a compulsory levy on the financial services industry for pensions and financial guidance provided by the CAB and other bodies?

    There is little merit in debating any expansion of the service; just ask the Chancellor if he is willing to fund it from taxpayer revenues (not loans this time either!). The silence will be deafening!

  5. When I was involved in the mortgage market years ago, few customers would take up mortgage payment protection, but I did push it and indeed when I was made redundant I claimed on my own for a few months.
    Having allowed shyster CMCs to scare people from such cover through their PPI tactics, one wonders if this has had a detrimental effect on the sales of mortgage payments cover and how many more will get into debt when jobs are lost/illness strikes.
    Fewer people would get into debt if they were paid a living wage mind you.

  6. Once again its sounds to me that CAB are going to be pitching for even more funding. They already have their fingers in the Pension Wise funding pot and are keen for more. They care not where the money comes from or who pays it and one received they see it as their own to spend as they wish. Because they are a charity they feel they are answerable to no one and above the law, their only aim is more and more funding.

    Its also worrying that once they were chosen to deliver the Pension Wise F2F guidance, they now want to expand into other areas of financial planning, all for free! But guess who will end up paying for this?

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