The proposed generic advice service risks a misselling scandal due to difficulties identifying the boundary between generic and regulated advice, warns a senior Treasury select committee member.
At a fringe event run by the Social Market Foundation and Provident Financial at the Labour conference this week, Edm-onton MP Andy Love warned it will be difficult to give meaningful advice without exposing the service to misselling problems.
He said it will be relatively straightforward to decide when a person should cross over to full regulated advice but there could be problems in deciding who is responsible for a future misselling complaint from a client who has used generic advice to move on to full advice.
He said the select committee has faced a barrage of complaints from the industry about the claim process and is worried that generic advice could make things worse.
Love said: “The dividing line between generic advice and regulated could cause problems with misselling and redress. I think it is going to be very, very difficult to get a meaningful advice service without creating some of these dangers. This is an area that is going to be very complex to get right.”
FSA director of retail themes Vernon Everitt said: “We can see there is an issue over where generic advice begins and ends. I am confident we can define generic advice in a way that gives everybody absolute clarity. We have tried it a couple of times and failed and we need to get it right this time but I am very confident we can do it.”