View more on these topics

Will people’s first guidance question be: ‘Is this advice’?


If you had two similar concepts you wanted to distinguish easily between what would you do? Perhaps you would name them: guidance and advice for example. Pretty simple.

But it seems some politicians think this is too complicated for the general public to understand.

After plans for collective defined contribution schemes were confirmed in the Queen’s Speech last week, Labour leader Ed Miliband told the House of Commons his party wants to ensure people get “proper advice” to avoid the misselling scandals of the past.

Despite several attempts to get clarification from Labour of exactly what Ed meant, none has been forthcoming. But I’m pretty certain that Labour policy is not now for everyone to have a right to “proper advice”. It is far more likely to mean he wants the guidance guarantee to be effective.

The pensions revolution announced in the Budget was said to draw a neat line between a paternalistic Labour Party and the Conservatives who want to give people freedom and will trust them to enjoy it responsibly.

But apparently, the Tories don’t think people are clever enough to know the difference between advice and guidance either.

Announcing his pensions revolution in Parliament, George Osborne said everyone would get “free, impartial, face-to-face advice”. Yet in the red book published as the Chancellor sat down, that suddenly became “guidance”.

Taken to task by the Treasury select committee over the change in terms, Osborne said it was a “technical distinction” and that in his speech he was “communicating in English” so the electorate could understand what he meant.

Osborne is right, it is a technical distinction. But so is the distinction between a defined contribution scheme and a collective defined contribution scheme or the difference between restricted and independent advice.

What should be obvious to anyone with a degree from Oxford is that by using two terms which mean very different things interchangeably you make things more confusing, not less.

Assuming the guidance guarantee is up and running by April next year as planned many people’s first question could be whether it is actually advice.

Surely it would have been easier just to make this clear from the start.

Steve Tolley is politics reporter at Money Marketing


News and expert analysis straight to your inbox

Sign up


There are 9 comments at the moment, we would love to hear your opinion too.

  1. The answer to the headline question is “No, they’ll just assume they are being given advice”. The question won’t occur to them. To the man on the street, if a bloke is talking to you about products and saying you should buy this one, that’s advice.

    Most people would instantly grasp the distinction to them if you said “Advice means that I take responsibility for what I tell you to do, and if you make a loss because I give bad advice, I have to pay you. Anything else means I don’t.” But no-one will admit this because the providers do not want to be made to open their sales pitch, er, guidance conversation, as follows: “This is guidance and not advice. That means I don’t take any responsibility for what I am saying to you.” “Why, are you trying to fleece me? Why should I listen to you if you don’t believe what you’re telling me?” “Er…”

  2. Free, doubtful, impartial, probably not, face to face, not a chance, advice, oh dear, 4 out of 4 wrong.

  3. There are three basic questions to ask Prior to any discussion ( 1 ) Are you Independent or Restricted ? ( 2) What qualifications do you hold ? ( to be provided with proof ). ( 3 ) What level of service are you going to provide and how is this paid for ? Once the client has requested this information – they can set up and agree their Terms of Engagement – and proceed.

  4. Could our politicians please give us examples of the miss selling scandals in relation to advice .Yes we have had our fair share miss selling scandals over the years. Inevitably it has been the product at fault.

    We can not hid the fact that some advice has been questionable, but it is usually(the advice ) on the basis to sell the product or certain advisers who are just greed ,or Incompetence or downright fraud.

    That is human nature and no one can legislate or regulate that. After all, we have seen our fair share in the halls of Westminster over the last few years.

    Will someone please tell these politicians that advice cost money. If they do not want have a scandal they Should consider alternatives.

    Why not give advisers contracts similar to GP’s where we can all have advice surgeries,Join a defined benefit pension arrangement and agree an guaranteed income for the advice we give.

    Alas that history is shown in that Profession that has not ,or may not reduce scandals that occur from time to time
    For once why don’t they (Politicians) be honest and say we cannot afford to provide you with sufficient guidance, or advice to make lifetime decision in Respect retirement.
    Going to have to go through professional adviser that is regulated and where to take the advice which may cost between £700 and £2000.
    Given the choice of having a safe and secure retirement’s, or forgoing second holiday in your first year of retirement. It’s up to you what you select.

  5. You’re right Steve, it is pretty simple. An explanation of the difference between guidance and advice could be given in about 60 seconds and it will no doubt be communicated early in the process when this thing is eventually rolled out.

    I’m getting a bit bored of this “story”. It seems like a fuss over nothing.

  6. Unfortunately, these polystyrene ” Poly” ticians, ar emore used to changing the Law to suit themselves and provide themselves with claims on double homes and other inducements. . . . . What is the difference between guidance . . advice and an Opinion ? Not a Lot ! as one magician used to say. To be frank he was better with smoke and mirrors and sleight of hand – but that was for ” entertainment ” rather than the creation of anxiety – the introduction of and administration of fraud . . . . .
    The REAL Scandal is those in a position of Power .. .who refuse to ACT . . .who as a result of their sloth and complacency . . . . .are accomplices in the ACT of tax evasion, Fraud etc., The lack of integrity by Directors of insurance companies and Banks – aid and abet fraud – to deliberately deceive – and deprive clients form their savings and their investments . . . is met by a complacent FCA . . .and incompetence in regulating their friends and amigo’s . .. . . How can anyone trust a bank ? How can anyone trust an insurance company with their life savings ? How can anyone trust an insurance company with their Pension Fund ? . . .Now the Government ( who have been complacent for decades – if not centuries ) on the problems within the State Pension Scheme . . . .are now forcing people to join a pension scheme . . . .the paupers pension – auto enrolment – which is a further tax on their salaries – double taxation – by George Osborne – as he still charges everyone for National Insurance – AE the double tax standards of Conservative Government !

  7. Let’s look at Sascha’s definition, “if you make a loss because I gave you bad advice then I will pay you”. So as a layperson I’m going t think that’s great. If I follow your recommendation and I lose out you’ll compensate me.

    Of course it doesn’t work like that, you can get “good” advice and still be worse off in the same way you can get “bad” advice and make money. Unfortunately the average client cannot grasp the concept that the quality advice is not solely determined by the outcome.

    We must be more honest and admit whilst we can do many things what we cannot do is to forsee the future and select the option that will give the best outcome. The one thing we can do is help the client make an informed decision and how well we do that should be the main criteria of how well we do our job

  8. Well I think the first question would be:
    How much will it cost?

    After that the people who use this type of site won’t know their ear from their elbow as usual. .They will probably think its advice and most of them won’t take it further and just go for the least bothersome option, which will probably be the annuity from the pension firm.

    All this agonising and expense for very little. Meanwhile the people with decent pensions will continue to use their IFAs – as they have always done.

    When will those that fiddle learn that the ‘Great British Public’ are disinterested, don’t want to know and would rather spend their money on £100 football tickets (if not even more) and down the pub. Meanwhile those who really do want to save , who put away worthwhile amounts, are cost effective and who will no doubt be taxpayers in retirement and support those who don’t want to know are discouraged at every turn. Madness.

  9. Samuel Lewis Mayes 12th June 2014 at 8:32 am

    Good thought provoking article.

    In my estimation, the product providers will see this as an income revenue exercise with little regulation to provide “guidance”.

    Therefore, they will blur the lines between advice and guidance and every one will live happily ever after until the client’s money runs out and they complain because they have been taxed at their new higher marginal tax rate to buy a fast car and white goods that last 5 years until replaced…



Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm