Out-Law News 2 min. read

New UK financial guidance body to have 'strategic' and 'educational' roles


The UK's planned single financial guidance body could be expected to work together with charities and the financial services sector to develop financial education programmes that meet consumer need, according to government proposals.

The government has now published for consultation its formal plans to bring publicly-funded debt advice, pensions and money guidance together into a single body, which it expects to happen "no earlier than autumn 2018". The consultation will close on 13 February 2017.

Once established, the new body will have five broad areas of responsibility: debt advice; occupational and personal pensions guidance and information; information on financial fraud and scams; guidance on wider money matters and improving financial capability; and co-ordinating non-governmental financial education programmes for children and young people.

It will replace the three existing statutory bodies with similar functions: the Money Advice Service (MAS), the Pensions Advisory Service (TPAS) and Pension Wise. These bodies will continue to operate as normal until then.

"A more coherent approach to public guidance though a single body will be a helpful piece of the overall framework that the industry will hope initiatives such as this and the Financial Advice Markets Review (FAMR) can create for customers seeking financial help," said financial regulation expert Tobin Ashby of Pinsent Masons, the law firm behind Out-Law.com. "Customers will look at their financial position as a whole and so it makes sense to reflect that in any public guidance."

"An important part will be for the guidance to identify where further help is appropriate and encourage customers to seek it where the guidance body cannot provide specific enough help, which could be part of the educational and strategic roles suggested in this consultation," he said.

The government set out initial plans for reform of the UK's public financial guidance services alongside the Budget in March 2016. It originally planned to develop separate money and pensions guidance bodies, but has since announced its intention to proceed with a single guidance body to further streamline the service and reduce consumer confusion.

The new body, which does not yet have a name, will ensure consumers can access high quality, impartial financial guidance and debt advice from a single source, although it will commission external, specialised providers to deliver some of its functions. It will fund providers to deliver regulated debt advice, but will not provide or support any other form of regulated, bespoke financial advice, according to the consultation paper.

Once established, the new guidance body will be required to design its own service delivery methods in line with value for money and consumer need, according to the consultation. However, it will be expected to provide a "multi-channel" information and guidance service including a customer-facing website, telephone-based pensions guidance, web chats and "some" face to face support, the government said.

"Our expectation is that the [website] will provide information to services on money, pensions and debt and will direct consumers to high-quality content where it is available elsewhere in order to minimise duplication," the consultation said. "In addition, the government expects the [guidance body] to innovate, ensuring that it meets the needs of consumers efficiently and effectively through best use of new digital routes."

The new service would be funded by levies on the pensions and financial services industries, in the same way as at present, according to the consultation. This funding model "remains appropriate given the benefits which firms will gain over time from effective debt advice, money and pensions guidance and financial capability interventions", the government said.

Levies will initially "remain in line with the amounts charged before the new arrangements take effect", but may reduce over time as the "efficiencies" of a single guidance body begin to materialise, the government said.

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