Regulated firms cannot be the scape goats for poorly named and unclear ‘advice’ offerings, an IFA has said, stating that firms who have ‘advice’ in their name, but only offer guidance are confusing the general public as they do not understand the difference between the two.
Martin Evans, principal of Newport-based Prism IFA, told FTAdviser that politicians, regulators and the industry continue to confuse consumers as “they do not understand the difference between regulated advice and guidance/execution type offerings”.
“This has to be the most important area of education to be undertaken by all to protect consumer.”
One example of this was this year’s Budget, where chancellor George Osborne declared everyone would receive “face-to-face advice” at retirement, while the actual Budget document did not mention advice but ‘guidance’.
Following the publication of a consultation in July, a number of trade professionals and consumer press also referred to the ‘guidance guarantee’ as advice.
Mr Evans said: “If your name has advice within it, then clearly you’re advising, from a consumer’s perspective’.
“So a starting point should be clearly named services. The Money Advice Service and The Pensions Advisory Service both offer guidance but are called advice services.
“Mas’s website, terms and conditions and their advertising mislead consumers and this has to stop. My fear being the regulated adviser community being blamed for poor outcomes taken from incorrectly named guidance. We cannot become the scapegoats due to poorly named and unclear offerings.”
Mr Evans warned that, assuming consumers know about the ‘guidance’ and act upon it, the pension guidance will just confuse them more. “A positive outcome will be more consumers seeking advice.”
He also questioned why Mas was spending its budget in building a new adviser directory, which was unveiled earlier this month.
“The FCA could improve their current system and is in a far better position to certify regulated advisers quickly, effectively and at a much reduced cost.
“Regulated advisers are aware of the potential pit falls that could await us. We will concentrate on positive outcomes for our clients, unfortunately those that do not engage our services cannot be our concern.
Mr Evans commented that IFAs cannot be associated with the next mis-selling scandal. “Advisers need to insure this will be the pleasure of unregulated offerings and government’s guidance services if we are to improve trust in advice.”
He added that in the run up to 6 April 2015, when the new pension flexibilities come in, media attention will highlight the “worst possible outcomes”.
“If the government, regulators and industry really want to get important points over to consumers, the only sure way to achieve it would be to demonstrate them within the Christmas Day episodes of EastEnders, Coronation Street and Emmerdale.
“This would work and the public would remember their favourite soap stars outcome. It’s also a sad fact that this would be far more effective than a guidance book.”
Mr Evans concluded: “Guidance will work for the financially educated, but cannot replace the need for face-to-face advice for the financially uneducated in insure the correct outcome.”