Pensions  

Let’s put a stop to the guidance and advice confusion

Maria Espadinha

Maria Espadinha

If you are suddenly taken ill and you go to a hospital, a nurse cannot write you a prescription.

He or she can assess your wellbeing and triage your symptoms, but only a doctor can order tests and decide what is the best course of action for your health.

A similar difference exists between guidance and advice. Only professionals with advanced training – financial advisers – can be responsible for telling savers what they should do with their money to achieve better financial health.

It seems to be an easy distinction to make, right?

Wrong. Not long before the Single Financial Guidance Body was rebranded the Money and Pensions Service I had a discussion with a government official about this topic. 

I was trying to understand why the word advice was mentioned several times in a government website promoting a mid-life financial MOT

He wasn’t able to understand why I was asking these questions, since the word advice was part of the name of the previous government bodies – such as the Money Advice Service or The Pensions Advisory Service – that were now merged into the new entity.

To be fair, he is not the first government official to make such a mistake – in 2017, David Gauke, at the time secretary of state for work and pensions, also called the government’s guidance services an “advice body”.

It is astonishing that despite the Financial Conduct Authority clearly stating that advice is based on a personal recommendation and guidance includes more general information about financial products, we are still having this discussion.

It is 2019. We had a pensions mis-selling scandal in the 1990s. We had the introduction of pension freedoms in 2015 and a complete revolution to the way savers can access their pension pots at retirement.

We had – and still have – the British Steel debacle which shed light on some rogue elements not giving suitable advice and regulators having to step in to protect savers.

But people are still confusing guidance and advice. And I’m not talking about the ordinary saver who does not know where to go to discuss their pension, or how much money they should invest in an Isa.

I’m talking about informed government officials who work on these matters for a living.

Which is why I was pleased to report that the new Money and Pensions Service is launching a series of listening events across the country. 

Consumers, pension experts and, of course, financial advisers, will be able to have a say in the future strategy of the government's guidance body.

The programme, which will be launched this month (April), will allow anyone who is interested to feed into the organisation's 20-year national strategy alongside its three-year corporate plan.