The City watchdog has launched a review of financial advice and guidance.
While I can hear someone at the back softly moaning, ‘Not another one’, this is actually a good thing.
There is still a huge amount of work to be done, which should be obvious to everyone.
With so many people not getting the advice – or even guidance – they need to make the right financial decisions, we remain in a comparative crisis in the UK when it comes to good money management.
The Financial Conduct Authority has long been aware of that and its relatively ancient Retail Distribution Review and Financial Advice Market Review were signs that it was stumbling towards solutions.
Now it is reviewing those reviews, which were in 2013 and 2015 respectively – or at least I think that is what it is doing.
Last week, the FCA launched a Call for Input asking for feedback on its proposed approach to reviewing the RDR and the FAMR.
Confused? I must admit I was after reading that. What is its proposed approach?
The FCA explained that the review will consider whether the RDR and FAMR “have been successful in achieving their objectives”.
Additionally, it will “look at what consumers want from the market and how the market works to deliver this... [and] consider how new market trends and developments might affect the future development of advice and guidance services”.
Got that? I hope so, as the watchdog wants to know what you think of it and has asked for responses by June 3.
What do others think?
Financial Adviser’s sister publication FTAdviser ran the story under the headline: FCA concerned about ‘driving too many people to seek advice’.
This prompted mortgage adviser Jane King to take to Twitter to ask: “For goodness sake! How can it be harmful to take advice on your finances?”
That seems a common sense question. Even if some people are pushed “unnecessarily” into taking advice, I cannot see how that can do any harm at all.
It is a point the regulator concedes, admitting that it did not think all this unnecessary advice had caused any consumer harm.
The real question is whether that advice causes any good. I believe that any advice is good, even if it only serves to help people be a little more informed about their financial choices.
The bottom line for me is that it seems million of savers are simply unaware that they actually have financial choices or that saving – whether for the short term or for retirement – can give them choices and, in turn, improve their quality of life.
How many people are financially vulnerable because of their lack of advice?
Andy Thompson, chief executive of Intrinsic, reckons “42m people need financial guidance”.
Ignoring the ongoing turmoil of what constitutes advice and what is guidance, he makes a sound point.