“Unfortunately, the Bill prolongs the problem. If the debt piece is called advice, then it has to take account of the pension piece, and once it is doing that, the pension element will have to be advice too, not just guidance.
"I ask my noble friend the minister to consider amending the word used by the single financial guidance body and the FCA so that it is debt guidance, not debt advice. We could use other words, such as debt resolution, counselling or help, but guidance seems to make sense.”
In response, parliamentary under-secretary of state for the Department for Work & Pensions Baroness Buscombe said she was very conscious of the concerns expressed about the difference between advice and guidance.
She said: “It may help if I briefly outline where we see the distinction. Debt advice is a regulated activity. It is provided by an FCA-approved debt adviser who provides an assessment of an individual’s debt situation and makes a recommendation on a course of action.
“The government currently fund free-to-client debt advice through the Money Advice Service. The key point here is that debt advice comes with a personal recommendation and action plan and is a regulated activity, so it is tailored to an individual’s needs.
"Financial guidance is the provision of more generic information about the various options open to an individual.
“No personal recommendation is provided, it is not regulated and it is not tied to selling a product as a result of the information provided. It is important that we understand that distinction as we go on to debate the Bill in more detail.”
The measures in the Bill outline four functions for the new guidance body.
Firstly, it will provide information and guidance on all matters relating to private pensions, covering both the basics as well as the more complicated issues.
That will include matters such as pension schemes and how they work; general information about the state pension; transfers between a defined benefit scheme and a defined contribution scheme; and the options open to people as a result of the pension freedoms.
Secondly, it will provide impartial guidance and information on money matters, including budgeting and saving, insurance, bank accounts, protection from fraud and scams, and planning for retirement.
Thirdly, a further function of the body will be to fund free-to-client debt advice for people in England with problem debt.
The fourth function requires the body to work closely with others in the financial industry, the devolved authorities and the public and voluntary sectors.