The Treasury has sought to show what progress it is making on increasing access to financial advice.
In the following statement, published yesterday, the Treasury has outlined seven ways financial advice is being made more accessible, which include changing the definition of advice and tax free allowances for pensions advice:
7 ways financial advice is being made more accessible
1. Clearer definition of financial advice
Government consultation on amending the definition of regulated advice under the Regulated Activities Order (RAO) has just closed. This would mean that only advice which makes a personal recommendation is regulated. This will encourage firms to develop guidance services which are more appropriate for those with simpler needs.
2. More affordable advice
The Financial Conduct Authority has set up an ‘Advice Unit’. This unit is working with 9 firms to help them provide online financial advice for people. This would be an online service that considers your circumstances and recommends the best course of action for you.
3. £500 tax-free allowance for employer arranged pensions advice from April 2017
From April 2017 any adult that receives pension advice arranged by their employer will be exempt from paying National Insurance and tax, up to the cost of £500.
4. £500 tax free retirement advice from Spring 2017
Government consultation closed on 25 October on allowing people to use £500 tax free from their defined contribution pension pot (a pension pot based on how much is paid in) to pay for retirement advice. We intend to make this available in spring 2017.
5. Online Pensions Dashboard by 2019
From 2019, people will be able to see the value of their pensions in one place online. A prototype will be built by March 2017.
6. Exploring funding options for the Financial Services Compensation Scheme (FSCS)
The Financial Services Compensation Scheme (FSCS) is the fund of last resort that compensates customers of UK authorised financial services firms if they are unable to get their money back from a firm because it does not have enough assets to pay claims made against it.
The money for the scheme is raised by a levy on financial services firms. The Financial Conduct Authority (FCA) is looking at enhancing the current funding model and will launch a consultation on this by the end of 2016
7. Created a Financial Advice Working Group
The group includes a selection of consumer and industry experts and began in June 2016 to look at how it can bring in three FAMR recommendations:
- a guide to the top 10 ways to support employees’ financial health
- a shortlist of potential new terms to help consumers tell the difference between ‘guidance’ and ‘advice’ and decide which is right for them
- a set of general rules and prompts to encourage consumers to get financial advice