Treasury support for national money guidance service
THE government yesterday signalled its support for a £50m-a-year national money guidance service as the Treasury and the Financial Services Authority weighed-in behind proposals by Aegon UK chief Otto Thoresen for a service funded by government and industry.
“Money Guidance” would be supported by a levy on FSA-regulated firms, consumer credit firms and National Savings & Investments, and governed by the principles of impartiality, supportiveness, crisis prevention, and universality, according to the Thoresen review published yesterday.
Chiefly targeting the sevenand-a-half million people seen as most vulnerable in society, but open to everyone, the service would provide information and guidance on budgeting, saving and borrowing, protection, retirement planning, tax and welfare benefits, and jargon-busting.
However, the service would be sales free and so stop short of recommending specific products.
Thoresen said a partnership model would “allow the service to build on the expertise of existing organisations who provide help and advice to the public” such as the Citizens Advice Bureau and the Pensions Advisory Service via telephone, face-to-face and web-based access.
The recommendation that the service be FSA-run, he added, was made on the basis that such an important initiative should be “led by an organisation that is recognised as a world leader in financial capability”.
The Treasury immediately responded that the FSA will lead a pilot project which will last fully two years – though Thoresen is thought to have favoured a shorter period.
It said the pilot would benefit from the experience of the £90m National Strategy for Financial Capability which the FSA launched in 2006 with the aim of reaching 10 million people by 2011, and that the government would respond further to the report in its financial capability action plan, later in the spring.
Hector Sants, FSA chief executive, said: “Otto Thoresen is to be congratulated for producing such a thorough report and setting out a clear road map for taking this work forward … We are working with many different organisations to provide clear and impartial information and guidance through our printed guides and website, Moneymadeclear, and recent initiatives like the Parent’s Guide to Money.”
The Association of British Insurers’ director-general, Stephen Haddrill, said: “The insurance industry has long argued an effective generic financial advice service has great potential to help consumers make better decisions … We believe, therefore, that an effective service should focus on all income groups.”
Pensions consultant Dr Ros Altmann warned that the service could be “fraught with danger” in providing advice on annuities and pensions.
“Retirement products are very different from most others and the government already has a dreadful record in trying to encourage private pension savings without explaining the risks properly.”