A completely independent body needs to be set up to offer generic financial advice, according to the Pensions Policy Institute.
In its response to the Thoresen Review, the PPI says there are lessons to be learnt from a similar experience in New Zealand.
According to Niki Cleal, PPI director, “New Zealand appears to have a very successful approach to providing financial education and generic advice, through the Independent Retirement Commission.
“Although it is not possible to say definitely that an identical approach would work in the UK because there are different cultures, regulatory systems and savings products, our research has identified some lessons for UK policy.”
The key lesson, according to PPI, is guidance should come from a body that can be seen to be independent of government and the financial services industry.
That’s essential if the advice is to be trusted by consumers, warns Cleal. He points out while the New Zealand Retirement Commission reports to a government minister, it is fully autonomous.
The PPI says a website is an obvious first step and the New Zealand website ‘Sorted’ - www.sorted.org.nz - provides a useful template. Other delivery channels, such as telephone or face-to-face, should also be considered.
Additionally, the Institute says generic advice should cover a wide range of personal finance issues – not just retirement planning.
And if the independent body had any other roles, they should be complementary of the specific remit chosen.
The New Zealand Commission’s other roles include research and advising government on the effectiveness of retirement income policy. It does not have any role that could compromise its independence. For example, it is not a regulator.
The Thoresen Review was set up in January by the Economic Secretary to the Treasury, Ed Balls, with a remit to deliver a blueprint for a national approach to generic financial advice.
Aegon chief Otto Thoresen was appointed to examine the feasibility of generic financial advice. He set a deadline of April 27 for interested parties to submit responses.
If you would like to comment on this story or speak to its author, telephone Simon Read on 0207 034 2680.IFAonline
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