New Chair of the Treasury Select Committee, Harriet Baldwin MP has tabled a motion in the House of Commons to make amendments to the Financial Services and Market Bill to include new laws to permit personal Financial Guidance. This will enable millions of lower income households access to cheaper financial guidance when regulated financial advice is not affordable.
Financial guidance would be permitted to be offered by regulated financial firms but stop short of personal advice.
Guidance means no advice; guidance means firms can say: “you need a pension and the shortfall to achieve a pension target of £10,000 pa is to save £200 pm” but what firms cannot say is: “you should start a personal pension with XYZ and need to invest £200pm in the MichaelMoose Fund to achieve your pension target”. Once a firm starts naming products, funds, or companies this is deemed as ‘personalised advice’.
The new guidance standard would allow advisers to recommend funds, products, buy funds, sell funds, exercise options and rights, etc. but would not have a requirement to declare that the actions were suitable for the person or in their best interests but merely that this is an ‘optional’ action or solution.
In terms of liability there is no liability where somebody is ‘guiding you’ and thus access to a financial professional for advice will be much cheaper. We have been working on a hybrid financial guidance solution for 6 years where an element of automated results and suggestions are delivered based upon your financial position combined with a Chartered Financial Planer then guiding you, if required, through the results. This may cost say £50 rather than the hundreds if not thousands of pounds for regulated personal advice.
May financial advisers will be critical of guidance, but we welcome the opportunity to design and build systems that can potentially help millions of people.