Is it a duck? Or a swan?
For expert, substitute politician, and the likelihood of it being a duck increases tenfold.
It is no surprise that David Gauke, the new Secretary of State for Work and Pensions has referred to the government’s new combined guidance service for consumers, as an "advice service". In reality, it is guidance, as financial advice has to be regulated by the FCA. Equally, the civil service mandarins at the Treasury are very clear about what constitutes regulated advice.
The legacy for the consumer is one of continuing confusion and disappointment as their search for advice from the government’s free service provides them with little more than information. This may spur some to seek advice from a regulated financial adviser. However, it is much more likely they will end up muddling through.
When you also consider the shockingly small number of consumers actually using the current guidance services, at about £500 each, it is obvious it would make more sense to set up a voucher scheme, which consumers could then use to obtain proper advice.
It is also worth noting that the Financial Advice Market Review (FAMR) and the advice working party have missed a real opportunity to end the confusion once and for all. Having done extensive research, they have produced a descriptor to try to clarify the difference between guidance and advice. The fundamental problem is that, for the layman, guidance and advice are virtually the same thing and easily confused, as clearly demonstrated by the new minister. I believe the answer is obvious; we should simply change the description of the service from impartial "guidance" to one of impartial "information". This would finally bring clarity, as almost everyone understands the difference between information and advice.
I urge the government and the FCA to recognise the potential damage to consumer outcomes created by the present confusion. It is time to clarify the situation by calling the new combined body what it really is – the Impartial Financial Information Service. Every consumer will then readily be able to identify which is the duck and which is the swan.
Ken Davy is the chairman of SimplyBiz Group