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Robert Reid: Let’s make advice terms clearer for consumers


I always wondered when phone recording would become the default. It reminds me of the police interviews on television where the twin cassettes enable the defence to get a copy of the recording too.

I am keen on the requirement being taken further to video recording, as are the professional indemnity insurers. Of course, some advisers and network bosses have said they are not sure everyone would want to be recorded but I would suggest their reluctance does not reflect a shy client bank, more a fear of being found wanting.

All this talk of recording was in my mind before the recent announcement about the definition of what constituted regulated advice.

Some years ago, just after we had run a second successful pro bono pilot with Citizens Advice, Gordon Brown set up a project to take advice to the masses. The project ran in the North West of England and was telephone-based. But the idea was to offer guidance – not advice – and that is where it came unstuck. Brown and his team failed to recognise that the target group would be the people to define the service output, not the Treasury or anyone on the project.

Following a request by the Treasury for an evaluation of the project, I listened to over four hours of calls. I was not alone but I seemed to be the only person who offered more than platitudes.

One consumer concluded his call by thanking the person at the other end of the phone for his “advice”. At this point they were told: “that was not advice, sir, that was guidance”. To which the consumer responded: “yes, thanks for the advice”. I will not bore you with more but suffice to say the call ended in an ugly manner.

What that taught me was that however advisers, providers, the Treasury and so on describe advice is irrelevant. The definition of advice is like beauty: it is in the eye of the beholder. It is what clients think that counts.

So why can we not just opt for a set of plain terms the public will understand? This is not the first time we have been taken round the houses regarding advice definitions. When ex-chancellor George Osborne called it “advice” when he really meant guidance all advisers should have recognised it as the beginning of the end for generic terms being used for a non-generic process.

What we should do is take inspiration from the big electrical appliance dealers. Let’s make it as clear for clients as when they buy a television, for example. They are usually offered three options:

No warranty: The consumer’s choice and the consumer’s risk

One-year warranty: Make sure the product is right before the year is up

Extended warranty: Covers a product longer-term but at a higher cost

That is easy to understand and easy to monitor. So let’s forget semantics and think communication.

Robert Reid is director at The Ideas Lab


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. Please log on to Rogets Thesaurus and type in the word ‘advice’ and you will see how many synonyms it has.
    Not unsurprisingly this includes the word ‘guidance’.
    Type in ‘guidance’ and the first synonym is ‘advice.
    No wonder the public and consumers and their advisers are confused!

  2. What? Extended warranties on electronics, as any fule kno, are as clear as mud. Nobody ever successfully claims on them. They are one of the biggest rip-offs going. There’s a reason the people in PC World and Argos are so keen to flog them to you.

    Moreover, if you choose not to buy a one-year or extended warranty, it is not “the customer’s choice and the customer’s risk”. They have a statutory right to a refund if the TV is not fit for purpose – which covers defects and failures within the period the TV could reasonably expected to work. The people who get conned into buying extended warranties tend to be the people who aren’t aware of… hang on, the penny has just dropped as to why Reid thinks extended warranties are an example to follow for financial advisers. Reid claims that electrical product warranties are “easy to understand” but the fact that he thinks they are a good idea suggests he *doesn’t* understand them, and his lack of awareness of statutory rights proves it beyond doubt.

    Compared to electrical dealers, advisers are a model of transparency. Your statutory rights are laid out in nauseating detail in the client agreement and other disclosure documents which must be regulation be provided to you at first contact.

    The idea that electrical dealers are an example for the advice industry to follow is an absolute joke. If we did follow their example, you would pay up to a 25% initial fee on an investment in order to have recourse to the Financial Ombudsman Service, you would only be able to submit a complaint within 3-5 years (basically two years fewer than the time it would take you to find out you’d been missold), and the FOS successful claim rate would be 20% of what it is now.

    • I never suggested we copy warranty conditions what I want is clarity tangental commentary such as yours doesn’t help. We need terms that are intuitive I simply made a suggestion if you have a better one let us all know.

  3. This man is talking complete Tosh, he obviously does not understand consumer rights or the rip off world if extened warranty (who’s terms and conditions look like war and peace) .
    VIDEO RECORDING ?!!! You really must be joking and the majority of my clients are seen in their own homes not my offfice and would find this gery intrusive. Its a big no no to both!

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