Government-backed advice agencies are misleadingly named, Keith Richards, chief executive of the Personal Finance Society, has said.
Last week, Mr Richards wrote to the Money Advice Service and The Pension Advisory Service, recommending they replace ‘advice’ with ‘guidance’ in their names “from a public interest perspective, to more accurately portray their service of guidance”.
In the letter, he said the services cannot provide regulated financial advice, meaning customers cannot benefit from full consumer protection, adding: “It is vital that the various bodies responsible for delivering the government’s pension reforms demonstrate a consistency of message”.
He said: “Aligning terminology will go a long way to ensuring consumers do not become confused when researching information regarding their financial planning needs.”
Mr Richards admitted that the advice profession did not own the word ‘advice’, but he said clarity was essential to help sign-post people to the right level of support.
The Money Advice Service and the Pensions Advisory Service are set to become the two main providers of free pensions advice (or indeed guidance) when reforms kick in next April. They are funded by a levy on the financial services industry, collected by the FCA.
Last month, several advisers suggested that a system of vouchers for customers to redeem at IFAs would better suit the industry and consumers, while an IFA who mystery-shopped Mas claimed the service had been unable to provide adequate guidance.
Criticism has not been one-way. In September, Caroline Rookes, the head of Mas, apologised to the Personal Finance Society for remarks expressing doubt over the ethical standards of IFAs.
The day after Mas was launched in 2011, some IFAs questioned whether free advice signaled the end of mass-market advice and threatened their businesses.
Adviser view
Kay Ingram, director of individual savings and investments for national advisory firm LEBC, said: “The word advice should be replaced with ‘guidance’ as that more accurately reflects what they offer.
“To purport to offer advice when they do not is confusing for the public, who will have their expectations of the service raised beyond what Mas and Tpas are capable of delivering.”
She added: “If the IFA sector and product providers are to pay for the guidance offered by Mas and Tpas, then we need more of a say in how that guidance is structured and delivered, or it will result in poorer consumer outcomes.”
