Aegon UK chief executive Otto Thoresen’s review of generic financial advice for consumers was published recently. It’s good to see some mortgage-specific action from the government, which will hopefully lead to constructive practical changes to the existing regulatory framework.
But has the government missed a trick? Unprecedented effort has gone into regulating and qualifying brokers, so wouldn’t consumers prefer it if brokers explained financial matters for them?
The Thoresen review proposes piloting a national money guidance service to help consumers with budgeting, retirement planning, tax and welfare and financial jargon.
It also recommends the use of comparison tables and websites, and the distribution of advice through brokers, social networks and viral marketing.
Thoresen estimates that money guidance could increase demand for financial services products, generating between £400m and £1.1bn a year.
The estimated costs of implementing the proposals are £49m a year, which the review recommends should be split between government and the financial services industry.
Levies on Financial Services Authority-regulated firms, consumer credit businesses and National Savings and In-vestment have been suggested.
Of course, mortgage firms are already paying hefty regulatory costs and might ask if the review shows that existing regulations are not protecting consumers.
It is arguable that the problem with existing Key Facts Illustrations and similar documents is that consumers don’t know how to read them. But for many clients it’s not a comprehension problem – it’s just that studying reams of financial documentation is unappealing.
I can’t help thinking the money would be better spent on a simple cam- paign – ‘Go see a qualified expert’. If I was ill I might consult a medical encyclopedia and give NHS Direct a ring, but ultimately I’d want to see a doctor.
The Thoresen review was intend-ed to deliver more access to high quality, affordable financial advice for the most vulnerable consumers. How much more affordable and impartial can you get than fees-free brokers who look at the whole market?
As a qualified money doctor, I can make consumers understand what they are committing themselves to. For the hour or two needed to establish their priorities, research the market and look at KFIs, borrowers can rest easy for years.