The financial services industry will benefit from government plans for a national financial advice service, research from the Resolution Foundation reveals.
The research, commissioned by the Resolution Foundation and carried out by Deloitte, shows that increased access to financial advice among people on low to moderate incomes would lead to increased take up of long term savings and insurance products, and reduced levels of debt.
It also suggests there would be long term benefits to the financial services industry as the advice would promote a more sustainable market.
It would also support public policy goals of tackling rising consumer debt and low levels of saving.
Based on just 10% of low earners acting on the advice they receive, the research shows that within four years of the advice becoming available new contributions to medium term savings plans would increase by 1.5bn net.
Pensions premiums would increase by 560m, life assurance premiums by 225m, credit card debt would fall by two-thirds from 2.5bn to 830m and 2.2bn could be wiped off other unsecured debts, facilitated by better borrowing with acceptable risk-adjusted returns for the financial services industry.
The research is today unveiled at a conference, organised by the Foundation to coincide with the launch of the Treasury-sponsored Thoresen Review of Generic Financial Advice.
Clive Cowdery, chairman of the Resolution Foundation, says: Greater access to financial advice links a sustainable financial services market with the
delivery of public policy goals.
This creates a win-win situation for the government and the financial services industry.
Otto Thoresen, head of the Thoresen Review of Generic Financial Advice, says: Generic financial advice is an important issue for all – financial services
companies, government and most importantly consumers. My review will create a blueprint for how a national approach to generic advice can be delivered, and I encourage all stakeholders to contribute fully to this debate.