Financial Advice Market Review  

Warning Maps strategy could blur advice-guidance boundary

Warning Maps strategy could blur advice-guidance boundary

The Money and Pensions Service (Maps) has launched its ten-year plan to improve the financial wellbeing of savers across the UK, but the pensions industry has warned its saving strategy could blur the lines between guidance and advice.

The industry-funded body today (January 21) launched its UK strategy for financial wellbeing, which sets out goals to be achieved by 2030 across five areas including financial education, saving, credit, debt advice and retirement.

But some in the industry have warned its “future focus” pillar, which concerns saving and investing for the long-term, may blur the lines between what constitutes guidance and advice.

To encourage more people to save in the long-term Maps has proposed introducing guidance packages which would work alongside the proposed pensions dashboards to help people take action when needed.

These packages would be focused on specific life events such as parental leave and divorce.

Tom McPhail, head of policy at Hargreaves Lansdown, said to deliver its goals it will need support from financial firms but the current regulatory framework does not allow firms to give savers the guidance and help they need to achieve good financial outcomes.

Mr McPhail said: “When it comes to promoting saving and investing and helping people to make decisions which will lead to better financial outcomes there are particular challenges.

“People need help in a variety of ways, such as nudges towards action, personalised communications to help them relate information to their personal circumstances and warnings against possible mistakes they might make. 

“It can be difficult for firms to deliver these interventions without straying into personalised financial advice. We’d like to work with Maps and the FCA (Financial Conduct Authority) to try and resolve some of these challenges.”

Steven Cameron, pensions director at Aegon, agreed it was difficult to offer more personalised support without straying into advice.

Mr Cameron said: “Providers will often be the first point of contact, particularly for clients without advisers, and many want to offer more personalised support. 

“But as was highlighted in responses to the call for input on Financial Advice Market Review (FAMR) and Retail Distribution Review (RDR), there remains considerable confusion over when guidance stops and where advice starts, with the answer often depending on the context. 

“The definition of advice flows from EU regulations, but with the chancellor vowing the UK won’t be post-Brexit rule takers, there’s an opportunity to revisit definitions to deliver good outcomes for UK customers seeking various forms of help with their finances.”

Maps has promised that by 2030 an extra 2m people will be saving regularly and it plans to increase financial education in schools to encourage people to think about saving at a younger age.

It is also considering mid-life MOTs, simplified annual statements, so that people can easily understand how much they have saved, and improving the consistency of language across the sector as many people struggle to get to grips with pensions jargon. 

The Money and Pensions Service is an arm's-length body sponsored by the DWP and funded by levies on both the financial services industry and pension schemes.