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Osborne dismisses concerns over advice/guidance distinction

Chancellor George Osborne has dismissed concerns he is confusing consumers by branding his at-retirement guidance service a “right to advice”, claiming he needs to “communicate in English”.

In his Budget last month, Osborne said all members of defined contribution pension schemes will be offered ”free, impartial, face-to-face advice” at age 55 from next April. 

Advisers slammed Osborne for “misleading” consumers by branding the service “advice” during his speech when it was clarified in the Budget documents as a “guidance guarantee”.

At the Treasury select committee today, Labour MP Pat McFadden said: “In financial services there is a material difference. Advice is regulated, it carries significantly higher consumer weight than guidance. It wasn’t correct for you to use the word advice in your Budget speech was it?”

Osborne said he was not concerned about calling the service “advice”, suggesting it was a ”technical distinction” and that “advice” was a clearer word to use in his speech. 

He said: “There is a technical distinction between advice and guidance. The Budget document exists, I don’t get up and read it out because it contains all the technical details of the Budget and we publish it at the same moment.

“The speech needs to also communicate in English so people watching it can understand what is meant. The issue you raise is not something consumer groups have had a problem with, they all understand what it meant and the general public understand as well.

“The key challenge is working with the industry and consumer groups to get this guidance right.

“There is a distinction; advice is what you receive to invest in a particular product for a particular company. Guidance is; you now have these freedoms so these are your circumstances, you may want to consider this product or that product.

“Our challenge is to make sure we get the best guidance package we can and then if people want to take full advice they can get it.”


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

  1. It’s a ‘technical’ difference until someone thinks they are receiving advice but is in fact not and they suddenly find they have made a bad choice but have no recourse because they are deemed to have made their own decision.

    Then try telling them it’s a technical difference.

    I don’t do mortgages and therefore I’m not fully up to speed but isn’t a key thrust of the MMR the movement towards advice being a default position????

    Many many consumers are oblivious to the fact that unless something is ‘advised’ on a regulated basis, they are essentially making their decisions – no matter how this ‘non-advice’ is dressed up.

  2. I’m sure the regulator will appreciate this clarification from George with regard to the ‘clear, fair and not misleading’ requirement.

    “The speech needs to also communicate in English so people watching it can understand what is meant.”

    I think I’ll frame that and put it on my wall for the next time the FCA promotions team visit. Should prove most helpful in our discussions.

  3. What hope is there if Chancellor of the Exchequer does not understand the difference between advice and guidance?

    The fact is he stood up in Parliament and said that every 55-year-old would be entitled to free advice maybe he should now stand up in Parliament and explain the difference between guidance and advice, as he has misled Parliament which is an offence under the Parliamentary rules.

    It was a great budget but this distinction is so important for IFA’s and the adviser giving community and the distinction needs to be made pretty clear by both regulator and politicians.

  4. Clearly we have to be more observant of the differences than people outside of our industry it seems.

    It appears quite straightforward to me, I am regulated to provide detailed advice and recommendations and I will do so for the correct levels of remuneration. If this is not a factor in the discussion, for whatever reason, then it won’t/can’t happen. It is not my problem, I did not create it and I certainly have not got the resources to advice at no cost.

    Where does this leave Joe Public in terms of advice/auto-enrolment et al? Well it’s back to the policymakers to determine that one.

  5. Michelle Cutler 3rd April 2014 at 2:37 pm

    Osborne said he was not concerned about calling the service “advice”, suggesting it was a ”technical distinction” and that “advice” was a clearer word to use in his speech.

    Technical it may be but essential it nonetheless is – I think there is a place for both advice and guidance but I am sure that customers are clearer that “information” is something they use to make their own decision and “advice” is something they need when they need help to make that decision than that “advice” covers both things.

  6. He sounds like a banker, therefore he must be a banker.

    I appreciate there is a technical difference between someone who works in finance and someone who has the qualifications to deal in banking matters, but does that matter? Apparently not! (and i am not referring to any ex-chairman of any particular banking institutions).

    This is where the lunacy of politics and regulation clashes. IFA’s cant use the word ‘advice’ (with or without a capital a) and certainly cant give Advice without having some pretty serious qualifications behind them, however it appears that any politician with absolutely no qualifications or experience can spout what they like about whatever industry they are head of that week!

    Dont get me wrong, this was a good budget, but let’s not just brush aside ‘technicalities’ as mere word play, that is ridiculous! However i am about to request that the FCA rescind our authority as we are no longer to give ‘regulated advice’ we are now going to give advice. I am sure our clients will fully understand the difference and if the FCA ask any questions i will simply explain that what they think we are doing is a mere technicality and we are no longer recommending any products we are merely suggesting them and offering the clients the opportunity to agree or disagree with the opportunities laid in front of them.

    We will of course be recommending that our pension clients buy a BRITISH Mclaren supercar rather than a foreign supercar. Someone has to look after the taxes in this country!!!

  7. Thank you George for yet again confirming my long held view that politicians are nowt but complete tossers.

    No doubt you also blur the distinction between tax avoidance and tax evasion. Perhaps if I evade I can call it avoidance – and avoid a term at Her Majesty’s pleasure.

  8. So he thinks the public, who he trusts not to blow their pensions in retirement, are so stupid that they can’t understand what guidance means.

  9. The term or should I say word “advise” doesn’t concern me as the use of the word “FREE” he used in the same sentence !

    Look we can debate all day long as to the actual meaning of the word advice, but there is no getting around the meaning of “FREE” (in this context)

    Nothing in this life is free and MAS is no different or even CAB for that matter it all has to be paid for somewhere

  10. Sorry I did of course mean Advice !!

    Nic’s new picture caught me of guard !

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