The government has launched its long-term approach to financial capability which includes designing a national generic advice service.
Ed Balls, economic secretary to the Treasury, revealed that a new taskforce, led by Otto Thoresen, chief executive of AEGON UK, has been asked to research and design a national generic financial advice service – ensuring that every person, including those on the lowest incomes, can get quick, easy and simple access to good quality financial advice.
A cross-departmental ministerial group will co-ordinate the government’s work plan to enhance financial capability to ensure government programmes link effectively to the new advice service.
The government believes that everyone in society has the right to get advice they can understand and trust on the financial options available to them, from getting out of debt through to choosing a home and saving for a pension.
Thoresen will report to ministers by the end of the year.
The government will publish an action plan by the end of 2007 setting out how financial capability will be integrated into existing services, particularly for those most vulnerable to the consequences of poor financial skills and taking forward plans for a national approach to generic financial advice.
The visit marked the start of the first ever Child Trust Fund week, promoting CTFs as a straightforward way to start saving for a child’s future.
The government is seeking to promote better financial education and to develop a savings culture amongst children and young people, and is encouraging schools and parents to use the Child Trust Fund account – which every child born since September 2002 receives – to help teach children about the value of money and the importance of savings.
Balls says: “We want everyone in society to have access to, and use, financial services with confidence.
So we must use all the levers we can to improve financial understanding and capability, including the Child Trust Fund.
Financial decisions are difficult.
Financial products are complicated and there can be too much jargon.
This puts people off, or they can end up buying something that is not right for them.
Sometimes people just want to discuss their financial options and not buy anything.
We believe there is a gap in the provision of this last type of advice – generic advice – and I have asked Otto Thoresen to research and design a national approach for filling this gap.
I am determined that we should extend the benefits of generic advice to all consumers who need it.”
James Purnell, pensions reform minister, who was also present at the launch, adds: “Millions of today’s workers are not saving enough for their retirement.
That’s why we are making it much simpler for people to save through automatic enrolment into a new system of personal accounts, or into workplace pension schemes.
Automatic enrolment will help people save.
But it will still be their decision whether to opt out, and how to invest their money.
Generic financial advice will be vital to help them make those decisions, and a wide range of stakeholders have urged us to ensure that is available.
Today’s announcement is the start of making that generic advice a reality.”
Thoresen says: “I am delighted that the economic secretary to the Treasury has asked me to lead this feasibility study.
The government is clear about the benefits generic financial advice can bring.
My role in chairing the study will be to provide realistic answers as to how it can be made to work in practice.”
John Tiner, chief executive of the Financial Services Authority, says: “I very much welcome the government’s long-term commitment to improving financial capability across society.
I am delighted that Otto Thoresen will lead a study into the provision of generic money advice, a key component of the national strategy for financial capability, and believe that the new ministerial group will bring focus and determination to the government’s major policy initiatives such as financial education in schools.”