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Tories free financial advice to cost industry £50m a year

The Conservatives say their free national financial advice service would cost the industry £50m per year.

The Tories put forward their proposal for a free advice service yesterday as part of their economic manifesto proposals.

A Conservative spokeswoman says the service would offer consumers impartial advice on money matters via face-to-face sessions,  telephone advice and online advice.

The spokeswoman says the service is about encouraging people to seek further advice and IFAs would have a role to play in the process.

She said: “It is about encouraging a culture where people do proactively seek financial advice. We think this would work quite well alongside IFA advice.”

Funding for the £50m-a-year service will come from a new “social responsibility levy” on the financial services sector.

The Government is committed to launching a Money Guidance service by 2011 with a £20m roll-out cost. This would be shared between industry and the Government with the Government ear-marking money received through reclaiming dormant accounts to help fund the project.

The Tories economic proposals, called A New Economic Model, set out eight benchmarks by which Shadow Chancellor George Osborne (pictured) wishes people to judge a future Conservative government.

A future Conservative Government would scrap forced annuitisation, raise the stamp-duty threshold to £250,000 and raise the IHT threshold to £1m.

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Comments

There are 51 comments at the moment, we would love to hear your opinion too.

  1. paolo standerwick 3rd February 2010 at 4:20 pm

    I already give free financial advice without a client to commit to a deal. What’s new?

  2. Fantastic, now we have the Tories wanting to compete with the FSA in order to make sure that everyone is treated equally and gets acccess to Financial Advice. Great and a worthy cause. However why should we have to pay for it.

    Happy Days’ Eh!

  3. Jennifer Nicholls 3rd February 2010 at 4:24 pm

    All I can say is ‘you get what you pay for’.
    Is the government going to pay for the qualifications needed?.

  4. A social responsibility levy?

    Beneath contempt

  5. Just how would “IFAs would have a role to play in the process”?

    Perhaps they’re thinking of exhuming the ‘pro-bono’ CAB sessions?

  6. Paid for by a new ‘social responsibility levy’ on the financial services sector? In other words another tax on an already beleagured industry.
    The industry is going to pay for advice to people who don’t want to pay for advice? Isn’t that admitting that the FSA stance on forcing advisers down the fee route is flawed?
    Maybe advisers will flood to work for this scheme and will be happy to be paid at the rate that the FSA reckons we should be paid…£10 per hour!

  7. So the ‘Industry’ is going to be invited to contribute to a ‘new’ social responsibilty levy.

    This will run along side the existing FSA levy which is a kind of social responsibilty fund as well – it pays for the ‘homeless’ FSA employees to be put up in hotels for up to £400 per night !!

  8. Are Doctors going to pay for the NHS out of their profits and Teachers for education out from their salaries – oh no I forget their all ‘civil servants’ on fat final salaries

    Based upon Maggie’s advice to take personal pensions and the sort of service the benefits advisers at the DWP hand out – god help the general public!

    They couldn’t organise a drink in a brewery, never mind the ability to get tipsy!

    They’re all as bad as each other!

  9. How can you use “beleaguered” to describe the financial services industry”? It’s awash with money – look at the hospitality afforded to IFAs by the providers – other peoples money being skimmed off year after year for very little added value (if any).

  10. So the Conservatives now realise that the public refuse to pay for advice, however the FSA want us to charge fees?

    Sorry, but I don’t work for nothing and neither should we be expected to. If Mr Osbourne wants to hand out free advice he can be my guest.

    As for the other lot and our esteemed regulator – they don’t have a Scooby between them!

  11. Who pays for this when the ‘financial services sector’ consists of just one man and his dog that they have failed to wipe out?

    Who do the recipients of dodgy advice sue when it goes all wrong?

    Come to think of it, this would be a good lead generation service, but who will get the leads?

  12. George Osborne has obviously got all his facts wrong and he obviously needs to be re-educated by the FSA. Although once skeptical about the notion that the public are willing to pay for financial advice, there are some very wise people at the FSA and they’ve assured everyone in the industry that people want to pay a fee rather than having advisers remunerated by commission. Surely it can’t be that they are wrong??!!! Oh no – have we all been misled? If Osborne is correct, that means RDR is all a nonsense – oh no – what do we do now???

  13. Andy Blatherwick 3rd February 2010 at 4:54 pm

    If they want free advice then go down the route the same as legal aid and let the govt pay for it

  14. Under the RDR proposals I will have to adopt a Customer Agreed Remuneration process with my clients and agree my fee/ cost in advance of doing any business as I will no longer receive commission for my services. Under these propsoals I will be required to pay a levy for free service presumably provided by another IFA/ “civil servant”. So, if my clients decide that they don’t want to pay me but would prefer to have a free service I will not have an income therefore I will not be trading so cannot pay the levy, so could Mr.Osborne please explain what part I will have to play in this process as I will but be paying a levy from no income!

  15. All this at a time when they are expecting the IFA SECTOR to spend 100’s hours getting the necessary qualifications to continue trading. Who’s paying for that? THE WORLD’S GONE MAD.
    Free advice subsidised by a well qualified industry? I think I’ll ask my accountant or solicitor to act for free. I dont think so!

  16. Where do they get these wonderful ideas?
    Which planet do these people come from?
    They have lost touch with the real world
    What hope for the future?Sad!

  17. We all moan and groan about the FSA and the proposals by the Conservatives, yet no one does anything about it.

    What actions are we proposing then?

  18. OK, so now we are going to be charged a levy to pay for free financial advice for the public? What the hell is that all about? Why don’t we just give them our profits & take their place in the benefits system?

    I thought the Tories at least had some idea – this is dangerously close to Nu-Lab’s gormless ideas for most things…….

  19. Once upon a time…. there were companies who employed advisers whose client base was in the main the working class. these advisers built up a relationship with the clients and were available to them when ever they were needed. These advisers generally lived and worked among their client base and were well known and respected in their community. The advisers earned a resonable living, the clients got good free advise and the companies received good quality business. this system worked for 150 years and made the prudential’s of this world what they are today. Then one day some bright spark thought we need to change this it’s old fashioned and these advisers need more qualifications and more people to check what other people are doing who are in turn checking some other people. It is not just the economic climate that has forced the demise of the local financial adviser, it is the whole package that has turned completing paperwork for a simple transaction into a huge task that bewilders clients and has placed an unrealistic amount of cost to bring in and maintain business. People need basic advise and we had the perfect system which worked a treat. So we now have some bright spark thinking up a way of bringing financial advise to the masses. They will be suggesting we collect premiums at the door next !!

  20. oh i want a job with them! sounds like fun .

  21. George Osborne must be on a different planet to me if he thinks I am going to pay for the public to receive free advice. I reiterate I am only legally responsible for my 150 clients who have over time become financially secure I am not financially responsible for another 40 million or so people. If he persues this avenue he will certainly lose my confidence and vote.He needs to get into reality instead of the fantasy world ( and join the rest of the political elite) he currently occupies or is he just plain stupid.

  22. Moving to France becomes more tempting every day!

  23. I don’t care whether this new idea gets off the ground or not, provided that the sector of the industry required to fund it is that which has the biggest asset base and the worst track record for the provision of quality advice. I’m hanged if I can see why I should have to pay towards it.

  24. OK, so we’ve now commented on this…unfortunately I have to agree with one of the previous comments…what will all these comments achieve? Nothing…unless we make a concerted effort to draw them to the attention of those who are supposedly the decision-makers.
    So, anyone got the email address for whomever we should send these comments to within the political parties, FSA, etc? This should then be followed up with a concerted campaign to emphasise the need for proper action as opposed to ‘headline-grabbing one-liners’.

  25. What worries me most about this proposal is that Mr Osborne is most likely to be our next Chancellor! If this is indeed his idea of how to bring advice to the masses, what hope does the country have of future economic recovery? The man is a numpty!!

  26. Another politician meddling and messing with financial services.It sounds like another camel.

  27. Can we have free MP’s please (without tax free expences) Final salary pension schemes and Salaries.
    Perhaps they could live off commission based on what they ACHIEVE. What a load of large spherical objects.

  28. Have the Tories consulted the IFA Community prior to this announcement? If so, who were the boneheads involved? I think this is an opportunity (and votes) lost to really work together and ‘get the show back on the road

  29. Try emailing: OSBORNEG@parliament.uk

    Coutesy of an IFA who is fed up and thinking of jacking it all in !

  30. It already exists and its called commission. I:3 buys and 2:3 get free advice.

    None so deaf as a regulator who will not hear.

  31. Scott Taylor-Barr 3rd February 2010 at 6:09 pm

    I thought this is why we had trade bodies, to put our side of the story accross? Time for Mr Cummings and Co to work their magic…

  32. A former FSA managing director said that under the Tories it will be worse than it is now. When you think about it the die is set on both sides of the English Channel.

    If you survive the RDR, the CPA and everything else thrown at you it may all be for nothing when the EU states who now hold the regulatory big stick get going.

    Bad boys, bad boys – what you gonna do when they come for you?

  33. Why don’t we just give our clients free advice and get paid commission by the providers – although the FSA is hel bent on getting rid of it? Instead New-Tories says I am going to pay a levy so a consumer can go to another adviser and pay him???

  34. Wonderful idea, the best news for the investing public is go to the London Stock Exchange with your money. The returns can be far getter than what the Insurance/come Finance industry offers and you do not have to wait 20-40 years to find just how tightly you have been screwwed.

    Is there anybody in politics with a brain?

    THe cream is stolen before it gats to the pie.
    The cost of regulation ensures poor returns

  35. Stop complaining take positive action, become a Member of Parliament the pay package per working hour, will blow your mind. The social life is the tops.

    The Party Leader tells you what to do, You do as you are told, get in front of the camera’s and earn a seat in the other house after a short time. Good citizens ensure all of the MP’s cost are funded as expenses (Cake Butter, fag papers, even cloth caps).

    Look at it this way, how many MP’s are Financial (idiots) sorry advisers. How many MP’s have to pay to go to work and how many advisers get subsidised meals (THe number will increase without a doubt)

  36. No such thing as a free lunch. When will these people learn. Allow commission but put a cap on it. If they can cap bonuses for bankers they can cap commission then every one wil be able to get advice

  37. Why should our industry have to provide free advice? No matter what socio economic sector people fall into they still have to pay for a plumber, electrician and so on. Once again our industry is being used as political ball.

  38. Isn’t Government wonderful.

    They seem to have all the good ideas.

    I await the development of this ‘WONDERFUL’ idea with such eager anticipation.

  39. There is already the Citizens Advice Bureaux and the FSAs generic guides online if people need financial planning guidance. What a waste of time and money. It would make more sense to apply a levy to pay for debt advice on the banks and credit card companies who are always encouraging people of all incomes to borrow more and more…

  40. Lift your heads and be constructive – how could the idea be shaped and improved so it really works for those potential new customers who don’t seek any advice at the moment.

    It could grow the market for all.

    But not if the cynics on this message board get their way!

  41. According to the Conservative Party website – you all have an opportunity to whinge in the correct direction…

    “George Osborne will be holding a live event on Thursday, 11th February in which he will answer YOUR questions on the economy – to find out more, visit http://www.conservatives.com/draftmanifesto

    There you go…

  42. and the advisor is qualified to give advice by who? Oh, I see it all now, the IFA gives free advice but has to pay for the priviledge of doing it by funding a levy, excellent well thought out.

    What a load of tosh,it’s just nice sound bites and as usual will be ignored by me…

  43. Why create another administration to collect funds? The FSA already levies the financial industry and has informing the general public about financial matters. It can do this without an additional structure.

    For those at lower incomes simplification of the tax and benefit structure would help more as this would give a more understandable system.

    Then use another existing structure, the CAB, to provide advice. The would need additional funding which could come through the FSA.

  44. It’s cunning. Osbourne disbands the FSA and sets up the CPA employing all the FSA staff who give out this “free advice”.

    If the free advice is – lets have your post code and here are five Independent Financial Advisers within five miles of you, then we have reached Nirvana.

    If it’s anything else well – Oh Dear, How sad but never mind.

    John Gummer – retiring from parliment end of this term should have a word in Georges shell along with Gummers other friends @ AIFA.

    If this Social Responsibilty Levy replaces the FSA levy and is less if IFA’s sign up to taking these “leads” then it’s workable.

    Let us hope that the Tories moniter this sight as well.

  45. Tories the new labour. It will end in IFAs sorting out the problem as we did with the governments darling Equitable Life. Why dont they leave the industry to do its thing and they sort out the country whats left of it.

  46. Ifa’s will indeed have a part to play in this. They will be forced to pay for it! Is this supposed to be a carrot from the tories?
    Another tax on small business which will no doubt go to pay the fat cat salaries at the CPA aca FSA I for one cannot wait to get out from under, this rotten to the core system.

  47. So we end up paying for the ‘advisers’ to provide all these people with free ‘advice’.

    Can we control the quality of the advice in the same manner that we can within our own practices or will the Govt/CAB/FSA promise to cover the cost of any future complaints concerning the ‘advice’? More likely to be funded by way of yet another levy!!

    Mad, the whole world is going mad – or is it just me?

  48. When the FSA came to regulate Mortgages, it immediately caused problems for the industry. Advisers who had been in the business all their life and had built up a good reputation, only receiving business by referals due to the good job they had done, now found themselves faced with having to sit more exams. Furthermore, instead of being able to give their customers the sound advice that they had been doing for years, they now have to have to keep records of every call that is made to them, so much paperwork that it is impossible to now give their customers all the time they deserve. In the past advisers were able to do lots of research for the customer and spend time to explain things, but now the paperwork is a minefield with a handbook of rules that could never be read by the small business that are just trying to do a good job for their customers and earn an income to support their families. Most advisers give free advice and do not charge until the job is done and the customer is satisfied with what has been done for them. We now have to pay fees to the FSA just to keep in the industry or be a tied agent to a company who will keep some of our earnings. If an adviser does a job and gets a customer a mortgage offer and then the mortgage chain breaks down , the adviser cannot charge for the work they have done. However, the solicitor can charge for any work they have done. The Government expect Advisers to work for nothing. They have totally ruined the industry. So many good Advisers have been forced to leave the industry. There is also this silly rule regarding Capital adequacy. If an Adviser does not have around £5,000 to £10,000 sitting in their bank accounts doing nothing they can be closed down. There has been limited funding available from Lenders which means most Advisers have had little or no work over the last couple of years. They still have bills to pay and some have lasted out, however, if they have had to use their capital to survive the credit crunch, it means they cannot stay in the Industry and probably will not get back in the Industry. Furthermore, they will probably recive a nice big fat find from the FSA. What a waste. The Government are a joke, Once again they are lining their own pockets. Lets have a vote about the FSA. I think most Advisers would like to return to things before they came into power on Mortgages. They have ruined the industry.

  49. Ignoring the fact that we will have to fork out regardless of the potential benefits, there may be a silver lining.

    The ‘free advisers’ will only be allowed to dispense generic advice such as, “you need to consider a pension/critical illness plan/ISA” and the consumer will have to find a source for this product.

    Whilst the banks will try to cream the bulk of this it does provide a platform for advisers to step in and produce the better quality service that our existing clients are aware of.

    Of course, the next ‘big idea’ might be for the ‘free advisers’ to guide the hapless consumer to some institution trusted by the FSA/Government. Nat West, anybody?

  50. Why do IFAs always get a raw deal.

    Now the Government are looking to implement free advice yet we have to share the cost! Ridicolus.

    If consumers require advice why should they receive it free? We are professionals that help our Clients in whatever area we specialise in and consumers should expect to pay for our services and to be encouraged to do so via fee. This is already hard enough for people to see.

    Isn’t part of this RDR business to help the Consumer see us as professionals, on the same playing field as others professionals such as Accountants and Solicitors. No Consumer would expect advice free advice from those sources, so why from our field of expertise?

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