As a child growing up, I had several books in The Observer’s Books series. For example, The Observer’s Book of British Birds, which allowed me to recognise different species from their shape, size and plumage.
Being able to recognise what is what is important in all elements of life. I was recently talking to some of those involved in the “label” stream of the Financial Advice Market Review, who admitted it was one of the most difficult tasks they had ever encountered.
Alongside many others, I was involved in the failed attempt to develop generic advice standards. Like the FAMR working party, I found it to be a challenging, and, quite frankly, mind-numbing experience where there were more prior agendas than solutions. The idea was great but the debate was always more about disclosure than standards.
Labels have long been a cause célèbre. I realise the discussion is nothing new but when you consider our regulator is product- not advice- centric, you can see why the policing has never been particularly effective. And nor will it be without a significant change in its strategic direction. The consumer is vulnerable in a mixed delivery market.
The Money Advice Service was always going to mislead and disappoint. We all know it is one thing for an individual to be guided and quite another for them to be advised.
As we wait for the launch of its replacement, I was pleased to see the Personal Finance Society ask the Government not to use the word “advice” in any of its branding, marketing or communications material.
The PFS quite rightly cited the TV advertising campaign claiming MAS offered “free, unbiased, independent advice” as evidence of its approach leading to confused consumers.
I would love to think that plea would provide a sensible steer with regards to labelling.
“When you consider our regulator is product- not advice- centric, you can see why the policing has never been particularly effective.”
A dangerous distinction
However, FCA chair John Griffith-Jones said earlier this month: “The problem is exacerbated further by the remorseless march of technology. Rules that were designed for the paperwork era do not work necessarily for the online one.
“The distinction between advice and guidance, once reasonably clear, has become much greyer with the advent of platforms and the potential of robo-advice.”
This sounds like its reasoning behind having regulated and unregulated products. All financial products should be regulated, with their providers paying for independent due diligence. Is robo-advice sitting on the “too difficult” pile as well? The last thing we need is the FCA being unable to keep up in that area.
The public deserves to know who is responsible if their purchase of advice, a product, or both, turns out to be totally unsuitable. They need to know this from clear disclosure.
They should be able to easily recognise the status of an individual, firm or website they engage with and the protection that provides (or not, as the case may be).
Clarity and brevity should be the key elements of any disclosure on labels and services. Anything else is for the birds.
Robert Reid is director at The Ideas Lab