In Romeo and Juliet, Shakespeare wrote the immortal line: “A rose by any other name would smell as sweet.” As far as the proposed new government body – to be formed in 2018 from the merger of the Money Advice Service, Pension Wise and Pensions Advisory Service – is concerned, its new name will be critically important. A world of difference lies in between the implication of ‘advice’ and the delivery of ‘guidance’.
Neither of these organisations, nor the new amalgamated body, are authorised to give ‘financial advice’. If a consumer is disadvantaged as a result of following their ‘guidance’, he or she has no access to any of the essential consumer protections. Quite simply, ‘guidance’ means no redress, no access to Fos and no compensation from the FSCS. Yet, despite the fundamental difference between guidance and authorised financial advice, two of these organisations include advice or advisory in their title. If these government bodies cannot be clear to the public about what they deliver, what chance has the poor consumer got?
I am sure we all remember George Osborne’s very clear reference to financial advice in his Budget speech of 2014, which was quickly switched to guidance in the official papers, as civil servants realised what a can of worms would be opened if it really was ‘advice’.
The government’s declared objective is to create a single financial guidance body that will be able to deliver a joined-up guidance service to the consumer; a worthy goal, and one I believe we should all wholeheartedly support, subject to it being crystal-clear to consumers that it is a guidance service.
It is often argued that financial services are confusing, so the last thing consumers need is lack of clarity around guidance when the new body is launched next year. I was delighted to see that Keith Richards of the PFS has urged the Treasury to drop the term ‘advice’ from the title of the new organisation.
Keith is doing a good job as chief executive of the PFS in ensuring that their view is heard in the corridors of power. In this instance, all advisers, as well as all consumers, should hope that someone down the corridor is actually listening and recognises that ‘advice’ is the rose and, by any name, ‘guidance’ is a cabbage.
Ken Davy is chairman of SimplyBiz