Guidance services should only be offered by authorised firms that commit to professional standards and treating customers fairly frameworks, the Personal Finance Society has said.
While the PFS is backing the Treasury’s plans to redefine regulated advice to just advice involving a personal recomendation, the professional body fears the increasing the scope of unregulated guidance could lead to consumer detriment without further safeguards.
Chief executive Keith Richards said: “Extending the scope of guidance to address entry-level or less complex savings and investment needs will help consumers make better informed decisions, and protect them from the increasing risks of ‘mis-buying’ and scams.”
“However, as the prevalence of scams continues to rise, consumers must be able to rely upon minimum standards from any firm or individual offering financial guidance, coupled with appropriate levels of protection.”
Guidance providers should have to abide by professional frameworks such as the Standards, Training, Accreditation and Revalidation programme, the PFS suggests.
Richards says: “The measures we have proposed should mitigate the risks of firms attempting to use guidance services to distribute products without being subject to regulation.”
When the new definition of advice and guidance is introduced, the PFS says it would also like to see those being the only two labels used in the sector, removing terms like “basic,” “simplified,” “streamlined” “focused” or “gated” advice so consumers are clear on what each offers.