An amendment to the Financial Services and Markets Bill tabled by Treasury Committee chair Harriett Baldwin MP would enable the Government to create a new ‘personalised financial guidance’ regime in the UK.
The amendment, if accepted, would allow guidance to be given to savers and investors which considers their personal circumstances
Under the proposed regime, provided firms did not recommend a specific product or course of action this would not risk being deemed as regulated advice
If accepted, amendment could give firms confidence to offer people who choose not to take advice (or cannot afford advice) with more tailored guidance without fear of straying over the advice/guidance boundary
Tom Selby, head of retirement policy at AJ Bell, comments: “While in an ideal world everyone would get regulated financial advice based on their personal circumstances, for a variety of reasons this will never be possible.
“The challenge therefore facing Government, regulators and the industry is how to ensure as many people as possible are helped to make the most of their savings and investments. This amendment, if enacted, has the potential to enable substantial improvements in the way information and guidance is provided to non-advised savers.
“As things stand, the point at which guidance ends and advice begins is unclear, meaning those engaging with savers and investors on a non-advised basis – including employers, Government organisations and financial services firms – often take a cautious approach when communicating. This is particularly the case where that interaction involves any consideration of someone’s personal circumstances.
“This results in the millions of people who don’t take advice receiving largely generic guidance which, while useful, has natural limitations. Creating a new regime which explicitly allows for more tailored communications has the potential to spur a cultural change which would benefit millions of savers.
“This should also benefit advisers in the long-run, as a better-informed public will be more likely to appreciate the complexity of the financial decisions they take, particularly around retirement, and many will want to seek professional help when navigating through that complexity.”