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