View more on these topics

Scheme must not undermine advisers

Following research by The Resolution Foundation, the government recently announced that free financial advice will be available to everyone within five years. This is an encouraging step as something needs to be done to ensure the nation has the tools to become more financially savvy.

But what this will involve and whether it will make a difference remains to be seen, so at this stage it is getting a cautious welcome. The format of the advice has still to be determined and this, along with funding, marketing and many other elements, will be considered as part of the job of the task force being led by Otto Thoresen, chief executive of AEGON UK.

Thoresen is due to make his recommendations to the Treasury on how he envisages the scheme working by the end of the year.

So far, the suggestions that have been made concerning the practicalities of such a scheme include a 15-minute generic advice-led session which would take place either over the telephone, the internet or in a face-to-face environment. But what is not clear is who will be responsible for giving the advice and whether it will be an end-to-end process including purchase.

Also, how much advice can you realistically give in 15 minutes? Bearing these points in mind, you have to question if this initiative should contain the word ‘advice’. Advice as we know it is a personalised discussion specific to an individual’s circumstances and needs. Spending 15 minutes with someone isn’t enough time to gather the information required for true advice so perhaps calling it financial information or awareness would be closer to the truth.

Another thought to throw into the pot is if people confuse information with advice, will they be getting the service they need? And if they are under the impression that advice should be free, could this not undervalue the role of financial advisers? Advice is a valuable commodity and undermining it by making consumers think it can be given away could lead to more problems in the future if people take a step away from financial advisers.

Of course, anything that can be done to raise awareness of financial capability is a good thing but we need to be careful how we achieve this. It will be interesting to see the recommendations the task force makes and how it plans to operate this scheme but in the meantime I’m sure everyone in the industry will have the opportunity to feed into the work being carried out to shape it.

You never know, if this scheme is introduced and positioned correctly, brokers might start to see more informed people coming through their doors asking for help.

Recommended

Nationwide signs LMS for three-year contract

Nationwide has appointed LMS to manage all the conveyancing of both its remortgaging and transactional mortgaging business for the next three years.The award of these contracts follows a five-month tender process in which Nationwide examined in depth the services and capabilities of the UKs main providers.LMS has been working with Nationwide for seven years and […]

TMB extends House 2 House criteria

The Mortgage Business has extended the criteria on its House 2 House scheme to allow borrowers to fund a second buy-to-let property. TMB calculates that 60% of borrowers on this scheme have the income available, coupled with the desire to fund the purchase of a second property under House 2 House rules, and predicts a […]

AToM introduces new three-year fixed rate

All Types of Mortgages has launched a self-cert three-year fixed rate from Kensington Mortgages.The near prime 500 is priced at 5.92% up to 85% LTV and is available to self-cert customers with up to 500 of County Court Judgements and defaults. There is no higher lending charge and it is also available up to 90% […]

Money for nothing, your HIPs for free

Cost has always been a key issue with Home Information Packs. I have no doubt that if HIPs were free the attitude towards them would be dramatically different to the hostile reception they have received to date.