Financial Inclusion Commission Response to the Advice Guidance Boundary Review – Proposals for closing the advice gap (DP23/5)

The FIC has shared its response to the Advice Guidance Boundary Review. While the FIC welcomes the commitment of the FCA and HM Treasury to close the advice gap and create a system which gives people the help they need, there are concerns that the proposals are less likely to be effective with people who are less well off than for those who are the main subject of them.

The FIC recommends that the proposals in DP23/5 are developed further in two main respects: firstly, to promote the giving of help by unregulated organisations, including the public and voluntary sectors, across a much broader range of financial issues than investments and pensions; and secondly, to ensure that ‘targeted support’ is developed in such a way that regulated firms employ it by acting as multipliers of MoneyHelper messages.

The Financial Inclusion Commission calls for the following considerations on the Advice Guidance Paper: 

• A broader and more holistic scope: there are many people below the threshold of the target range under proposal three of DP23/5. The focus of the paper seems to us more industry-based on those who are relatively better off, with savings and investments. It does little to increase the much-needed emphasis on financial inclusion for people with lower incomes or savings 

• The critical need for debt advice/guidance on basic resilience and dealing with debt: the delivery of help with financial issues is one of the most important components of addressing the financial exclusion crisis

• A refocussing of the MaPS: the Advice Guidance Boundary Review should present an opportunity to see the role of MaPS equally as active, and with as much resource devoted to how to get advice or guidance to people, to prevent them getting into financial difficulty, as to solving problems when they have 

• A re-consideration of the recommendations of the Thoresen review to take steps resulting in people from all areas of society becoming more pro-active and aware of how to deal with key financial issues, which could overcome barriers to consumers accessing the straightforward financial help which is, or will become available as a result of the review, but which is currently little used 

• Ensuring that “targeted support” is developed in such a way that regulated firms actually employ it through the creation of a clear and solid safe harbour. Experience with many previous attempts at a ‘middle way’ suggests that firms are likely to avoid giving targeted support unless they are confident that they will not be the subject of significant future risk of targeted support being reclassified as ‘advice’ or the Financial Ombudsman Service awarding redress

Our full response to the proposals can be found here.