A solution for this unserved group faces several challenges, which are collectively delaying support for the people who most need help.
Tisa has been working closely with its member companies to proactively find solutions and raise this to the attention of the Financial Conduct Authority, HM Treasury, the Department for Work and Pensions and the Money and Pensions Service.
Perhaps the current crisis will accelerate the desire to find a solution, as the UK mucks together in boosting economic resilience.
At the end of the day, the more financially independent and resilient each individual is, the stronger the economy.
While the ideal situation would be for everyone to receive advice, a way to deliver this at a low cost and with the ability to adapt to customer complexity has yet to be found. That is where the benefits of more personalised financial guidance need to be acknowledged.
It does not take a financial services professional to know that the current definition of ‘financial guidance’ is vague. So vague that, when Tisa asked five leading companies to review a set of 20 examples of customer support to ask if they represented guidance or advice, we received five very different answers because of the ambiguity of the rules.
We need an enforced, unified approach to ensure clarity and consistency and greater personalisation to make guidance more effective.
The main case against loosening rules around guidance is trust. It is argued that financial services could use guidance as a means to flog inappropriate products – but there are ways of tackling this with appropriate regulations, qualifications and accreditations.
Furthermore, by limiting who can offer guidance services to regulated financial services companies and Maps, appropriate controls can be put in place.
Tisa is extremely supportive of the action that has already been taken by the FCA during this pandemic: to permit additional flexibility on the scope of financial guidance support for customers.
This came shortly after the announcement of the FCA Business Plan 2020-21, which includes a focus on better consumer outcomes. This will allow companies to provide more constructive support to the non-advised market, covering investments and pensions.
For now, we must remember that this is only the beginning. The true extent of the economic downturn that will follow Covid-19 is yet to be realised.
While it is crude to talk about ‘positives’ from the pandemic while we are still firmly in its grip, I do hope that the importance of savings and good money management will be put back into the heart of British households.
Charles McCready is strategic policy director at Tisa