From the Editor: Who will advise on the right advice?

Chancellor Alistair Darling has just added another piece to the jigsaw of the financial services industry of the future.

He unveiled the Government’s new Moneymadeclear scheme which will provide members of the public with access to free face-to-face ‘independent’ financial advice.

According to the FSA, “fully trained” individuals will be on hand to offer basic financial “guidance” for telephone and in-person customers, which will be available from next month. There will also be a comprehensive website.

Many advisers have welcomed the scheme as they believe it will help people who may not have taken any financial guidance at all in the past. However, they identify a gap which the scheme will not plug, caused by the introduction of the RDR at the end of 2012. This is the area of the advice spectrum filled by consumers at the lower end of the wealth scale who want to access a more in-depth service than Moneymadeclear can provide.

Some in the industry argue many of these people will be disenfranchised by the RDR as the number of advisers will be reduced and the shift away from commission models will penalize consumers who are not able to afford upfront fees.

The ABI also cautions consumers the Moneymadeclear scheme will only serve those with the most basic financial needs.

It says: “As part of our work on the RDR, the ABI is working on a new financial advice service, known as simplified advice. This would be for consumers who are unable to afford or do not require full advice, and will complement Moneymadeclear.”

Although this service may help fill the gap, there could be problems ahead. Will consumers understand all these different forms of ‘advice’? With several different advice streams to choose from, and the terms ‘independent’ and ‘financial planning’ bandied about, the educational part of introducing the new financial landscape to consumers needs as much work as the establishment of the schemes themselves.

Katrina Baugh, editor, Professional Adviser