 |
|
Comment: April 2008 |
Money Guidance
The Chief Executive of Aegon, Otto Thorensen, has completed his
fourteen month review of generic financial advice and has
developed a concept which he calls ‘Money Guidance’. The idea is
that there will be a free service available to the public which
will offer a combination of telephone, internet and face-to-face
guidance. The FSA will shortly launch a two year trial which will
be called ‘Pathfinder’. The FSA will direct strategy, set
standards and deliver some services but much of the service will
actually be delivered by accredited partner organisations such as
the Citizens Advice Bureau. Various other organisations, charities
etc. have volunteered to be involved. Presumably everyone will
hold a minimal FPC type qualification? Begging to be included -
straining at the leash - are the banks and large life assurance
companies. What a selling opportunity this would be for them!
Somewhat unrealistically in our view,
Thorensen has said that life companies and banks will
have to ‘prove their impartiality’ before they can offer
Money Guidance. This sounds a bit like telling wolves
they will have to prove that they do not like the taste
of sheep. The cost of Money Guidance will be shared
between the Government and the Financial Services
Industry. This is expected to translate into an increase
of 4% in FSA fees for regulated firms. A big moral
problem we see here is that if ‘proper’ advisers have to
increase their client fees to fund yet more FSA levies,
then their paying clients will effectively be
cross-subsidising people who do not want to pay for
advice.
Thorensen is determined that the Money
Guidance should be ‘principled’ and recommends it should
be:
-
On the side of the consumer
-
Supportive of individuals
-
Preventative – as the service is
preventative not curative - it is not designed for
those in crisis
-
Free and available to all
-
Sales free - information only to be
given
We are highly sceptical of this
initiative, but very much hope to be proved wrong. There
are two main areas of concern. First, however much
publicity is generated, at the end of the day, Joe
Public will have to take the initiative - pick up the
phone, log on to the internet or whatever - in order to
seek advice. Will he? We suspect not, any more than he
was proactive when Stakeholder was launched.
Second, the banks, large building
societies and large insurance companies will fall over
themselves to become involved, with no altruistic
purpose what so ever, but simply trying to generate
angles whereby they can encourage people to buy their
products. As so often in the past, we feel that this
project, while festooned with good intentions, was
conceived by people who do not really understand how the
world actually works. In a few years time, it is likely
to be declared a huge success, then quietly wound down,
or radically changed, having cost a great deal of money
and achieved very little.The above is the lead
article in our monthly CPD Digest. Please
click here for information about the full Digest.
|
