Philip Wise, managing director for West Sussex-based Spofforths Financial Planning, has said that terminology used to identify what the financial advice sector does should be simplified so that consumers may better understand the different products on offer.
He said: “It is easy to confuse the term ‘advice’ with ‘regulated advice’. The latter involves a product recommendation, and is defined by the FCA, but consumers often define and understand the concept of advice as telling someone what they should do. “
Mr Wise said that using simpler terms would help get around the problem. He said: “terms need to be used that fit with consumers’ understanding of advice. The FCA should clearly define advice, and it should not be influenced by those with vested interests.
“The FCA should be accountable for this, but it and its predecessors have failed to define advice appropriately in all their years of existence”, he said.
The comments by Mr Wise follow research findings from Aegon UK in November that found that 76 per cent of respondents in a poll were unable to differentiate between financial advice and guidance.
Right to reply
A spokesman for the FCA, said: “We are currently - with the Treasury - reviewing the advice market and one of the issues that we will consider is whether there are any barriers consumers face in seeking advice; the value they place on it and how easy it is to understand where advice can be found and what it means.”