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White paper: Money Guidance to cost up to £2.7bn

The financial services industry will have to share costs of up to £2.7bn involved in the Government’s new Money Guidance service.

Today’s banking white paper from the Treasury has revealed that the generic advice scheme will cost between £1.4bn and £2.7bn. This will be shared between the Government and both FSA and OFT members.

The £12m pathfinder, jointly funded by the Government and the FSA, was launched in the North East and North West of England in April 2009. The Government says it is aiming to reach between 500,000 and 750,000 people by the national rollout of the scheme in spring 2010.

It says that the overall benefit of the Money Guidance scheme will be worth more than £24bn over the next 52 years.

The advice service is being aimed at the most vulnerable cases, helping them with budgeting and making ends meet on a reduced income, as well as using a redundancy payment to reduce debts. It will also help with coping with the financial repercussions of the death of a spouse and help with maximising income in retirement.

Cicero Consulting director Iain Anderson says: “The question of who pays for Money Guidance has been posed since the Thoresen Review. That question has now been answered and it will be interesting to see if the industry – perhaps cowed by the events of the past two years – will pick up the tab without a fight.”

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