Caution urged as free financial advice service launched

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Article published by IFAOnline 12th March 2010...

''Caution urged as free financial advice service launched

A Government scheme providing members of the public with access to free face-to-face 'independent' financial advice is being rolled out nationwide.

Moneymadeclear, described by the FSA as effectively the "brand name" for Money Guidance, includes access to a helpline, website and face-to-face advice services.

The FSA says "fully trained" individuals will be on hand to offer basic financial "guidance" for telephone and in-person customers, which will be available from next month following a successful pilot in the North East.

Chancellor Alistair Darling says the cost of the service, which it expects will help about a million people in the next year, will be funded by a levy on the financial sector and funds recovered from dormant bank accounts, with the Government meeting part of the cost in the first year.

Delivered through partners including Citizens Advice and Age Concern, Darling says people will get access to free advice on money worries, financial planning, or advice on their rights and actions they can take if they feel they are not getting a fair deal.

Many fully-fledged financial advisers welcome the Money Guidance initiative - the brainchild of a project led by Aegon chief executive Otto Thoresen - but argue the FSA's RDR is unnecessarily disenfranchising consumers from access to paid-for but in-depth advice services.

"Moneymadeclear is free, impartial advice for all, whether you are unsure about the small print in a mortgage form; want advice about opening a savings account for your children or grandchildren or you want some help dealing with repayments before they get out of hand," Darling says.

The ABI cautions consumers the Moneymadeclear scheme will only serve those with the most basic financial needs.

"If they need specific advice, the new service will only be able to offer general advice," ABI director of life and savings Maggie Craig says.

"As part of our work on the RDR, the ABI is working on a new financial advice service, known as simplified advice. This would be for consumers who are unable to afford or do not require full advice, and will complement Moneymadeclear."

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Adviser comments from the forum...

Post - ''So, regarding the final paragraph, what happens with those who need full financial advice and cannot afford it? The Moneymadeclear website is deeply flawed and this sounds like an attempt to nationalise advice; it just doesn't wash with me.''

Post - ''So, "advisers" who will soon be approved persons (why don't the FSA know that the plural of person is people??!) will pay a levy to fund a body that will be competing with them? What planet is this? Have I been abducted by aliens or slipped through a tear in the space/time continuum?''

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cherry comments...

''Speaking as someone involved with cherryFind (a group that exists to purely to help and protect consumers by ensuring that impartial / independent mortgage and financial advice remains available and affordable to all), we have long said on behalf of our 30,000 plus mortgage and financial adviser members - and all the clients they help and protect - that the FSA is not, and has not been for some years now, 'fit for purpose'.

Yes. As Mr Sants says, everyone DOES need protection when considering mortgages and financial advice AND THAT IS WHY THE FSA - AND THE GOVERNMENT - SHOULD BE HELPING TO DIRECT PEOPLE TOWARDS TRUE INDEPENDENT ADVISERS perhaps via sites like www.cherryfind.co.uk where consumers can go, without charge, and find advisers they feel comfortable with, WHO HAVE PROMISED TO ADHERE TO THE HIGHEST STANDARDS OF ETHICS and to always, without exception, put the needs of the consumer first.

Why, oh why, aren't the FSA and the government supporting and promoting those who the FSA regulate rather than putting 'services' in place that endanger advisers and hence consumers too. Wake up everyone!

What isn't needed is for them to spend their budget on such things as their so called 'Free general guidance service' that are likely to be mistaken by consumers as proper advice. What consumers need is to be directed towards PROPER independent advisers so that they get get something much more valuable than 'general guidance' at a cost that will probably be offset anyway by the value they have received.''