Launched by Ed Balls, this consultation signals a renewed determination by the government to tackle wider concerns about levels of financial capability.
Since Balls came into the Treasury as a minister in May 2006 he has taken a personal interest in the delivery of strategies on financial inclusion, capability and access.
Generic advice is certainly not a new idea, having been on the policy drawing board for years.
At the heart of the debate is the question of how to ensure those people who are on or below the margin of being able to afford professional advice but who still need to make decisions about the suitability of products are well served.
The press release states: “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 though to choosing a home and saving for a pension.”
While there have always been warm words about the benefit generic financial advice could bring to consumers and the financial services industry, there has been little political will to make a national service a reality.
Think of the cost and who will want to pay for it, came the cries – rapacious financial services firms certainly won’t.
Think of the pitfalls, think of the potential headlines, thought the politicians – ‘Government-backed scheme gives wrong advice costing voters millions’. After all, in a world of retrospective regulation, advice can sometimes prove to be wrong.
There has been a great deal of lobbying in this area over the past two or three years, not least by the Resolution Foundation which has looked at how to increase access to financial services for those people on low to moderate incomes.
For example, it undertook economic modelling based on work by Deloitte which showed that people on low to moderate incomes stand to gain as much as 60,000 by the time they reach 60 if they are given access to financial advice.
Balls announced that a task force led by Otto Thoresen, chief executive officer of AEGON UK, has been set up. Its job is to research and design a national generic financial advice service.
The aim is to ensure that every person, including those on the lowest incomes, can get quick and simple access to good quality financial advice. A tall order. Thoresen is expected to report to ministers by the end of 2007.
Balls’ vision is that everyone in society should have access to and use financial services with confidence.
Consumers are sceptical of financial advice. When doubt is cast on its veracity – for example, the recent and public questions raised about the quality of mortgage advice – it’s hardly surprising.
Balls has brought renewed vigour to the debate and if fine words are turned into action, everyone will benefit.
We could even see the back of some of those mis-selling headlines, especially if consumers feel confident in questioning the advice they are given.