Two weeks after ex-FCA boss Hector Sants was revealed as the chairman of the government’s Single Financial Guidance Body, Money Marketing has learned the new service will not be operational until winter.
The timing for the launch of the new guidance body has been uncertain ever since the idea was first conceived. A preliminary consultation had April 2018 as the earliest possible date for the merger of the Money Advice Service, The Pensions Advisory Service and Pension Wise into a single financial guidance provider.
Following that, a further consultation then said the new government arm would not be up and running until the autumn at the earliest.
Financial Inclusion Centre co-director Mick McAteer says the pushing back of the launch date coincides with plans for an incoming chief executive to settle into the role.
The body will be held accountable to parliament and will not provide regulated advice or support straying outside the definition of “guidance”, though companies offering services like debt counselling that the single guidance body will channel funding to may give regulated advice.
At the time of writing, the government is still advertising for a chief executive for the new body with a salary of £175,000 listed. Once hired, that person will start looking at how the single guidance body will work in practice. It is understood interviews for the position will be held throughout July.
Of the recruitment process for the much-anticipated body, McAteer says: “I think it’s better to take the time to do these things properly. Given combining three bodies includes merging culture and style as well as objectives, it’s very important that the right person is hired for the job.”
On the immediate list of priorities for the body will be separating the
provision of “advice” from “guidance” more clearly.
Regulated advisers have shown concern that without better definitions consumers already in favour of independent advice due to the terminology and negative connontations of “restricted” advice could remain biased or not seek advice in the first place.
With concerns as to whether the body will be able to build an effective remit that balances the wishes of the three merging organisations, Money Marketing columnist Paul Lewis says it will need to remember its main audience is general consumers, not advisers.
Having the term “financial inclusion” included in the remit of the new body, as some MPs have called for, was shot down in parliament, as it could make it even harder for consumers to understand its role and how it will differ from the FCA, which has an objective to protect consumers.
Lewis says: “The majority of the population will not want the single financial guidance body to give them information on the many complex choices, but to cut through complexification by the financial services industry.”
McAteer says that the chief executive will play the main role in determining all strategic objectives for the body and therefore have the most influential say in what issues the body will deal most in.
It can be expected that the responsibility for coordinating the provision of debt advice, money guidance and pension guidance will be a core objective. Personal pensions will also be a likely area of focus.
McAteer says the remit is likely to be straightforward and the merger of the three bodies will mean resources are better pooled. While the guidance body cannot tread on the FCA’s toes, he says that public financial education will be key.
He says: “They key things for the new chief executive and the board are dealing with debt and boosting financial resilience. People need to be on a journey to this resilience and understand the process of how their money works.”
The name for the new body is also still unknown. McAteer says it is likely an announcement will be made immediately following the appointment of a chief executive.
Pensions minister Guy Opperman says he believes a majority of MAS, TPAS and Money Advice employees will retain their jobs once the new guidance body is operational.
The way in which staff integrate together and are assigned roles will likely depend on a combination of experience and qualifications.
Aegon pensions director, Steven Cameron adds: “When TPAS, MAS and Pension Wise staff come together the key will be to ensure the much wider range of customer queries are dealt with by staff with the appropriate knowledge and experience.
“While there will no doubt be a need for additional training, we expect the new body will be exploring new processes, for example to direct calls appropriately or to forward on customers who have queries in more specialist areas.”
There is no proposed minimum standard of qualification for staff who will provide guidance under the new service. While TPAS staff are required to hold pensions experience, staff at Pension Wise and MAS are not. Some TPAS staff also hold Chartered Insurance Institute qualifications.
MAS’s 2018/19 budget shows £500,000 has been set aside for work related to “transition projects and professional and legal fees to support the transfer of staff, information, knowledge, processes, assets and liabilities, as well as closing MAS as a legal entity”.
Neither MAS or TPAS provided comment to Money Marketing on the transition of its staff, confirming the department for work and pensions is facilitating the integration.
A DWP spokesman did not respond to Money Marketing before the publication deadline.
The funding of the new guidance body is set to be achieved through existing levies on pension schemes and across the financial services industry. Until the remit of the body is established, the amount of funding needed also remains uncertain.