Helping people acquire the skills and confidence to handle money issues and manage through critical financial events is one of the great social challenges in this turbulent world. As such, the Government is currently considering the scope and functions of a single body to oversee money guidance in the UK.
Many people across socio-economic groups unashamedly admit handling numbers is outside their comfort zone. The impact of this goes much wider than financial health: it can have detrimental effects on physical and mental well-being too. So there is significant macro impact in terms of health services costs and loss of productivity.
We now have the chance to build financial resilience, making sure people have the skills, confidence and practical guidance they need. I am pleased ministers have decided the best course is a single body with responsibility for delivering well-integrated money and pensions guidance. We know from our own experience that people’s issues do not fall neatly into discrete categories.
The challenge now is to make sure we get the scope and functions right. In my opinion, the new body should have two clear goals:
- Enhancing the quality of financial decisions and, over the longer term, increasing people’s ability to take charge of their financial affairs. It should prioritise people struggling to get by, for whom one good or bad decision can prove a tipping point.
- Helping to build a society in which people feel confident to face and manage their finances; equipped to know when and where to seek help, and knowing that help will be honest and fair.
To achieve this, the new body should focus on immediate pressing needs: debt advice, investment decisions, planning for retirement and pensions decumulation. It should focus on the consistency and value of interventions funded and delivered by the public, private and voluntary sectors.
It should focus on determining what works and what can be applied at scale. It needs to find the right balance between in-depth direct and indirect guidance: for example, when can it “hand off” seamlessly to someone better equipped to serve the customer.
It should utilise high quality, digital delivery channels across all areas. This type of direct guidance will be an important part of the mix where provision elsewhere does not effectively service customers, thereby leaving gaps.
To be clear, I am not promoting a world in which people know so much about complex financial arrangements and products there is no place for expert and regulated advice. Far from it. Finance and financial products are becoming more complicated and intricately related, so there will always be a need for high quality guidance and advice in many forms.
Building public trust and confidence is essential. Good businesses know people will use and pay for the services they can trust will best serve them.
We have taken important steps towards what good money guidance can look like, putting a greater emphasis on evidence-based priorities, building stronger relationships, avoiding duplication and knowing what we do best (and what others might do better).
I believe this has created a strong template and legacy for the new body: a strategic catalyst at the centre of a highly valued wheel of advice and guidance. Well-connected, respected for its expertise and able to turn ideas into action.
Caroline Rookes is chief executive of the Money Advice Service