The financial services industry and the government must share the cost of funding generic financial advice, according to the Thoresen Review.
Otto Thoresen’s, chief executive of Aegon UK, interim report has laid down the case for national generic financial advice to be funded by both the government and the financial services industry, although this will not be linked to product sales or specific providers.
Thoresen was appointed by the economic secretary to the Treasury to carry out a review examining the feasibility of delivering a national approach to generic financial advice. The aim is to ensure that there is greater access to high-quality affordable financial advice for those who are considered most vulnerable to the consequences of poor financial decision-making.
By ‘industry’, the report refers to at least those who contribute to the national strategy for financial capability via the FSA levy, and possibly also some of those selling non-regulated financial products that are likely to generate calls on the service. It stated that the ‘most secure and equitable funding mechanism’ for the industry contribution is through a compulsory levy which could take the form of a new levy or an existing FSA levy. However, further debate on how the funding might work in practice would be welcome.
Depending on the final design, annual running costs could range from £40m to £80m. The generic advice will be delivered in an environment which is clearly not linked to a product sale and will give guidance designed to empower individuals to make decisions, although it will stop short of recommending a specific product with a specific provider.
Kitty Ussher MP, economic secretary to the Treasury, said: “I want everyone in the UK to have access to high-quality information and guidance on personal finance, whether it be for ‘jargon-busting’ or to help them get the best out of the financial products and services on offer. This will help people make decisions that are right for them and manage their money better.”
The report outlined the evidence, research and analysis that the Thoresen Review has undertaken to date. It set out current thinking and direction, providing an overview for the work that the Review plans to carry out before making final recommendations early in 2008.
For previous comment on the government’s plans for generic financial advice, click here.