Regulation  

Making good on promises made

Making good on promises made

Financial capability has become a thorny issue for the government, with indebtedness levels reaching astronomic proportions.

According to the Bank of England, outstanding consumer debt stands at £190bn in the UK, so various attempts have been made to address the issue to try and find some kind of means of providing much more sought after financial information to protect financially unsophisticated people from fraudsters and scammers.

This conclusion was established some time ago with the Thoresen Review and the Money Advice Service (Mas) was launched, but after spending £100m on advertising that had little effect, and claims that it was duplicating efforts from other people, the consumer guidance body has been scrapped and the government has now gone back to the drawing board.

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New Single Financial Guidance Body

Just before Christmas, HM Treasury and the Department for Work and Pensions launched a consultation document outlining their plans for a new Single Financial Guidance Body (SFGB). Since Mas was launched, pension freedoms have come on the scene, followed by Pension Wise – another government-sponsored guidance body to point people in the right direction over their retirement choices. 

Meanwhile Tpas, a third government-backed information service, also helps people to understand their pensions. It was unanimously decided that these various guidance bodies should come under one roof to consolidate what each of them does best and avoid duplication.

Laurence Baxter, head of policy and research at the Chartered Insurance Institute, said: “The general direction of travel seems to be sensible. They’re creating a consolidated single body that will hopefully carry on all the work of Tpas, Mas and Pension Wise, and that’s a positive step. But it’s very much down to the implementation that retains the outstanding work of Tpas and the work that Mas has done on their website. I think it’s really important that leadership of the body has experience of dealing with these issues.” 

Mr Baxter added that many if these initiatives might seem good ideas. However, he said: “If they’re not fully implemented, we’re back to where we were 20 years ago.”

The consultation paper, Public financial guidance review: consultation on a single body, set out the approximate vision of the new entity without a huge amount of detail. It describes five areas of activity the organisation should have as its remit to deliver or commission services. These are: provision of debt advice for problem debt, provision of information and guidance on pensions providing information and guidance to help consumers avoid scams, co-ordinating efforts to improve financial capability, and co-ordination of non-governmental programmes of financial education.

The paper is quite clear about the provision of financial advice. It states: “The SFGB will fund providers to deliver regulated debt advice, but will not provide or support any other form of regulated financial advice.