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Think-tank calls for state-backed advice network

Mick McAteer 06

The government should create a national network of financial support to provide holistic guidance, according to the Financial Inclusion Centre.

In a paper published this week, the think-tank argues that the major obstacles preventing consumers accessing financial advisers are economic, rather than regulatory.

However, it proposes this could be bridged by a network offering guidance on issues including debts, credit cards and pensions and be backed by funding from taxpayers or the industry.

This is planned to be led by a telephone service, and could utilise existing resources such as Citizens Advice branches, the think tank says.

It would bring together pensions freedom guidance in a sole service with other financial support, going beyond existing information available from providers like the Money Advice Service.

The Financial Inclusion Centre says while the FCA should seek to reduce the burden of regulation on advisers, this is unlikely to be sufficient to make advice affordable.

The paper says: “We cannot identify any significant regulatory requirements which demand standards of behaviour over and above those that would be expected of a well-run firm that sought to understand the needs of its prospective customers, communicate fairly and openly, and provide a professional, quality service.”

The think-tank also plays down the risks that firms which meet current regulatory standards will be judged retrospectively.

It says: “We are not aware of any cases where regulators have reinterpreted and applied regulations retrospectively. Regulators have made it clear on a number of occasions that firms and advisers are judged by the standards of the time.

“Customers can’t afford to save, can’t afford to pay for advice, and the industry is just not efficient enough to extend access to under-served customers.”

As a result, the think tank argues the Treasury’s Financial Advice Market Review should look at developing a national network, backed by a cross-subsidy either from the public purse or the industry.

It says the network would provide advice, guidance and information to consumers who are not commercially viable to be served by for-profit organisations.

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Comments

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

  1. 1. Who decides who is “not commercially viable to be served by for-profit organisations”?
    2. Is “not commercially viable to be served by for-profit organisations” based on income, net worth or both?
    3. Will this service actively turn away wealthier potential clients?
    4. The main issue: what do people need advice on if they are “not commercially viable to be served by for-profit organisations” and why can’t this be fulfilled by TPAS, Citizens Advice, Money Advice Service and the Pensions Wise Service. Do they want pension advice? Go to TPAS or Pensions Wise or MAS. Do they want investment advice? First of all if they are “not commercially viable” can they really afford to invest rather than use savings/deposit accounts? Second use MAS. Mortgages? MAS. But there’s no “advice gap” with mortgages as there’s still plenty of commission-only mortgage advisers. Life insurance? First there is no advice gap so speak to a commission-only adviser. Second use MAS.

    This is unbelievable. I really feel I must be missing something major here.

  2. At last. Many of us have called for something like this for years; a dedicated facility for people however would argue about the efficiency of the industry. It is more the in-efficiency of regulation and the associated costs that is causing the issue over the advice gap. I am also sure that many advisers would argue that FOS has a different approach to “We are not aware of any cases where regulators have reinterpreted and applied regulations retrospectively. Regulators have made it clear on a number of occasions that firms and advisers are judged by the standards of the time.”

  3. Why? What advice can you give to customers who can’t afford to save? Financial education in schools would be a better use of taxpayers money, surely.

  4. Does any other industry pay for free advice from a state backed competitor that they pay for?

    So why should we?

  5. Also “…backed by a cross-subsidy either from the public purse or the industry”. Yes, let’s ask the Tories to go against their austerity plans and help the lower classes get financial advice for free. They will love that proposal. I’ll get my cheque book ready just in case.

  6. What’s a think-tank?

  7. The interesting thing here is that it confirms what many of us have suspected for some time that the one thing missing from a “Think Tank” is actually any “thinking!”
    “backed by a cross-subsidy either from the public purse or the industry” If it happens money on it comes from a levy on advisers.

  8. These think tanks keep coming up with these wonderful ideas but the execution of them is woeful at best mainly because the state backed structures already in place that use the word “advice” in their titles cannot give advice to fill the gap they were designed to fill. Talk about under served customers? Get the state “advice” services giving advice and you fill that gap many times over!!

  9. Another idiot who wants to take my money to give to someone else. That is theft in my book.

  10. I would like to suggest an alternative to the term ‘Think Tank’. For many of these I think an appropriate alternative would be Stink Tank.

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