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Recommendations for a national money guidance service

3rd March 2008 Print
Otto Thoresen has published the final report of the Thoresen Review of Generic Financial Advice. The report sets out a high-level blueprint for a national money guidance service to provide the people of the UK with the knowledge, understanding and confidence to make better decisions about money issues. It recommends that the service should offer a combination of telephone, Internet and face-to-face guidance.

Otto Thoresen said: "I believe that good money sense needs to be as much part of people's lives in the twenty-first century as healthy eating and keeping fit.

"Money Guidance" will help people deal with the money matters that shape their everyday lives - budgeting their weekly or monthly spending, saving and borrowing, insuring and protecting themselves and their families, retirement planning, and understanding the technical language that we in the financial services industry too often use.

"People have told us that they want and would act on this guidance.

In research we commissioned 75 per cent of people surveyed said they would use a "national information and guidance service for personal finance issues" . Of these, over 25 per cent felt that they would be very likely to use this service. And evidence from our practical prototypes suggests that eight out of ten participants took at least one action within a week or so of using the service. Over half of these took specific action, such as buying a new product or speaking to a regulated adviser.

"My report sets out how a national money guidance service could transform people's lives as well as bringing substantial benefits to the industry and Government. Its recommendations to the Government set out a vision for how the service could be delivered."

The Report makes the following recommendations:

A national Money Guidance service should be governed by the principles of impartiality, supportiveness, crisis prevention, universality, and should be sales-free.

Money Guidance provided by the service should focus on giving people information and guidance on budgeting, saving and borrowing, protection, retirement planning, tax and welfare benefits, and jargon busting. It should stop short of recommending specific products.

The most appropriate way of delivering a money guidance service is a partnership model, with a central body to direct the strategy, set standards and deliver some services, but with much of the service actually delivered by accredited partner organisations which could include those who already do such a good job helping people with their money.

A UK-wide approach to Money Guidance should be delivered using a multi-channel approach - telephone, face-to-face and web-based service.

Money Guidance would need a new brand which encapsulates the principles of the service, most notably that the service is "on my side" and is "sales free" .

The marketing strategy for Money Guidance should be multi-faceted, to appeal to the different groups the service needs to reach. This should encompass national and regional marketing campaigns and engagement activities; trusted intermediaries; and social networks and viral marketing.

The Financial Services Authority (FSA) should take forward the national Money Guidance service project.

In view of the real benefits that would be delivered by a national Money Guidance service, the costs of providing the service should be equally split between the Government and the financial services industry.

The industry's share should be raised via a levy, with contributors drawn from firms regulated by the FSA, consumer credit firms regulated by the Office of Fair Trading, and National Savings and Investment.

To ensure that the national Money Guidance service can be up and running as soon as possible, the Government should set up a regional pathfinder service as soon as it has had the opportunity to consider this report. The Review believes a large-scale pathfinder that enabled the report's recommendations about the service to be thoroughly developed and road-tested should last around two years and would cost around #10-12 million.

The Review recommends that the pathfinder should build upon the protocols the Review developed for its two prototype services, including their definition of the boundary between the service and regulated advice.

In making its recommendations the Review draws on a wide range of evidence and consulted widely with stakeholders. In particular it draws on the results of two prototype Money Guidance services commissioned following its Interim report.

Otto Thoresen said: "Partnership should be at the heart of a Money Guidance service. This would allow the service to build on the expertise of existing organisations who provide help and advice to the public and are able to reach out to people in ways and places that are convenient to them. I have spoken to many such organisations over the past year and I know that they are keen to help.

"I considered whether an entirely new organisation should be set up to run Money Guidance, but concluded that in the short to medium term the FSA should take this forward. I believe it makes sense for this important initiative to be led by an organisation that is recognised as a world leader in financial capability."