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MM leader: Misguided use of ‘advice’ will cause confusion

The Government’s new Money Advice Service and the FSA’s forthcoming consultation on simplified advice have reignited debate about the misuse of the word “advice”.

We suggest that, in giving advice, you should be taking on responsibility for the advice you are giving yet a lengthy disclaimer on the MAS website stresses that it takes no legal responsibility for the service it is offering.

The MAS proudly states on its website that it has received a gold standard for the use of clear English. Yet this same website states the advice service does not offer regulated financial advice. Confused by this use of English? We expect many consumers will be.

In the context of the retail distribution review and the clarity that is needed on the types of advice that will be offered, the Government has done consumers a huge disservice in branding this industry-funded initiative the Money Advice Service.

Using the name Money Guidance Service would have given consumers a better understanding of what it has to offer compared to the different levels of regulated advice they can receive.

The FSA is to finally consult on introducing a simplified advice regime over the next few months.

As Aifa chairman Lord Deben points out in an interview in this week’s Money Marketing, the banks seem desperate to use the word “advice” as it would give their simplified offerings an air of independence that is not deserved.

Unhappy with the rigid and expensive requirements of the new restricted advice sector, many of the big banks and insurers are pinning their hopes on simplified advice.

We should welcome the clarity that this consultation will hopefully bring to this area. There is a need for a clear set of guidelines for how the financial services industry will interact with the Government’s proposed simplified products regime.

Making it easier for individuals and their families to gain access to basic protection cover, for example, would be a positive step.

But the FSA has a chance to make up for its failure to set in stone a clear differentiation between advice and sales as part of its RDR consultation by replacing the word advice with a more appropriate term.

Consumers need to be clear the adviser is on their side and is prepared to stand behind the advice offered.



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There are 10 comments at the moment, we would love to hear your opinion too.

  1. Based on Gordon Brown’s comments I wouldn’t hold out much hope of the banks not getting their way.

    PS surely the Advertising Standards Authority should be investigating the MAS for false representation?

  2. Think of a name for a service that properly describes it, then change it to one that doesn’t. Brilliant! Given that in most cases, the conclusions of any “guidance” would very probably have to be to see an IFA, one wonders how much of a hand the FSA had in the decision to change the name.

  3. The assumption is that the banks will pay compo whereas IFAs will not, as this is a compensation machine the banks will win even though few ‘customers’ find the courage to complain.

    The assumption is incorrect, the evidence is there for all to see but of course the regulators are keen to obtain a well paid job at the… er… banks.

  4. “Money Made Clear” promoted by the FSA failed in its principal aims, the FSA and the Government know the advice gap will expand come the implimentation of RDR, those who cannot or will not pay a fair rate for advice will use the nil cost option because they beleive what it says on the tin, its all another disaster waiting to happen, real advice is delivered by good IFAs – promote them!

  5. Lee Brooke-Pearce 14th April 2011 at 11:00 am

    I appreciate IFAs are regulated in terms of the advice they give by product type but until they are culpable for their advice in respect of investment performance (and rewarded by it perhaps ?) I don’t get that excited about the term advice at all. Seems to me that the longer it stays in a “black box” with the associated air of mystique customers will fear to tread generally whether it be with independent, restricted or any guidance of any kind. Pay by results please !

  6. Back in the mists of time, one Ron Sandler, in one of his otherwise useless reports commissioned by Chancellor Brown to give credence to what the Treasury had already decided, actually came up with a gem of an idea. He said that people who sold advice should be called advisers, and everyone else would have to think of another name. He was right then, and he’d still be right now. The consumer cannot and will not be able to sort out which advice is or is not independent, restricted, simple, basic or whatever. Give it a year or two and the morons at whatever succeeds the utterly discredited FSA will hire expensive researchers to prove that RDR isn’t working, at which point they will change one set of complexities for another set of complexities. I wonder when a politician will insist on someone making sense of all this.

  7. A very large part of the public do not care in the slightest about what terms this mistrusted industry decides to use. They will select products based on price and only begin to consider the distribution channel if a failure occurs, by which time information only channels have gobbled up all the easy money and have the “you signed the terms and conditions” statement waiting and ready.
    Pointless waste of money and energy given the FOS already know this to be true.
    The FSA and providers want to stop the public dealing with a trusted PERSON and prefer this drive to automation as it suits their agenda’s and not the publics interests. These arguments serve only to muddy the water. If you dont give holistic advice -dont use the term advice, simples!

  8. Anonymous is totaly missing the point. IFA’s are responsible for advice, not performance. In the same way that providers cant be taken to task on performance. Advice takes in a multitude of factors that has everything to do with clients circumstances, likelyhood of changing circumstances and the advisers experience of the deceiptfull way that financial organisations and governments work. The independants job is to advise, react and protect the client going forward, any adviser that thinks his value is picking funds or is responsible for investment performance is mis-informed

  9. Anonymous | 14 Apr 2011 11:00 am & Paul Veitch | 14 Apr 2011 1:29 pm ***************** I have to agree with Paul. One aspect of investing is risk. You can’t expect IFA’s to have a crystal ball and insulate you from losses. Occasionally the investing public needs to take some responsibility.

  10. This is so far away from FSA’s remit it’s laughable. Would I phone OFGAS if I wanted ‘advice’ on what type of gas cooker I needed? Would I phone OFSTED if I wanted ‘advice’ on what A levels my daughter should take? No. Of course not. That’s because they are Regulators, they do not provide consumer-facing advice.

    And what if someone takes ‘advice’ from the MAS and it is incorrect, causing them to suffer loss? Is MAS going to stand up and be counted and pay compensation? Of course not. You may well ask a bloke down the pub for financial ‘advice’. What a complete waste of time and OUR money. And how jaw-droppingly arrogant of FSA.

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