I wasn’t particularly looking for a job with the Citizens Advice Bureau, but there it was, in black, blue and white, someone wanted to give “financial advice”.
We looked twice. Financial Advice? Not “money advice” or “financial guidance” or “money guidance”. Financial Advice.
The word ‘advice’ is not the sole property of the financial advisory community. If it had been, I could have told my mother more often that I could not take her advice because she was not a qualified financial adviser. Although she was a qualified insurance underwriter with the Guardian way back in the old days.
So we got our intrepid hack (we have more than one, actually, but only one working on this story) to call up the CAB and ask them about this.
“Is this an actual financial adviser?”
“Is this role a QCF Level 3, 4?”
“Is this role being created in advance of the guidance guarantee?”
Answers:
“No, it’s just money advice. It’s not regulated financial advice. We just call it financial advice.”
“What’s QCF?”
“No this is not being created because of the guidance guarantee; it’s just a regular role.”
I’m not taking issue with CAB. It does a very good job to help many people. But I am taking issue with a fluffy definition of advice that comes all the way from the top - the FCA, government, etc - and filters down through all the permeations to the end consumer.
We’ve just about grasped that advice is only generic advice until it leads to a product recommendation.
But what if, come April 2015, people go to CAB or others and the lines between generic financial advice and advice that leads to a perceived recommendation become blurred?
For example, suppose I am a pensioner with a new-found pot of £35,000 and I go to CAB. They might tell me a range of options.
But what if I pin point one of the options - say they mention Isas. What if I say: “What sort of Isa?” and they tell me about stocks and shares or cash. What if I ask them which is better and they tell me about the differences between cash Isas and Stocks and Shares, and then I ask them if they have a cash Isa, which one, who does cash Isas?
Have I led myself down a path that could lead to me taking out a cash Isa? Could the “adviser” be at risk if I have misunderstood the limits of the advice given and gone to a bank and taken out a cash Isa with a poor rate?
What if I am signposted to advice, but because I’ve had 30 minutes with an unqualified “adviser”, I think that I am going to have to pay someone else to be just as non-committal?
We asked CAB about any recourse to compensation should someone believe they’ve had the wrong “advice” from one of their representatives.
Although CAB is not regulated advice, if someone wants to take it up with the Financial Services Compensation Scheme, they can. Which means they CAN claim against unregulated advice. And who foots the bill for this? Regulated advisers.
So if you can claim against poor “generic” advice, doesn’t this make it a form of regulated advice? And if it is not regulated advice, can we PLEASE stop calling it “Generic Advice” or “Financial Advice”? I’ve been writing about financial matters since 1999 and even I’m confused.
I have a lot of sympathy with the letters written last week by Keith Richards of the Personal Finance Society, calling on MAS and TPAS and CAB to use the phrase “money guidance” and “debt guidance” to help consumers understand what they are really getting.
It should be a clear menu:
Financial advice - qualified, regulated advice that leads to a recommendation
Money guidance - less qualified, unregulated information service that does not lead to any recommendation
Debt guidance - some basic budgeting recommendations and help to get out of debt
At least, that would be advice as I understand it.
