The Financial Services Skills Council (FSSC) is working with the Financial Services Authority (FSA), employers and consumer bodies to develop new standards for people giving generic financial advice.
The FSSC says generic financial advice, which can cover everything from giving very general basic information, such as how to open a bank account, to advice on how someone could allocate the distribution of their investments, is not subject to regulation in the UK. The aim of the standards is to give reassurance both to consumers and to providers, which range from banks to consumer groups.
Vernon Everitt, FSA consumer sector leader, says generic financial advice could potentially play a major role in increasing the financial capability of consumers in the UK.
Everitt believes the establishment of generic financial advice standards would mean advisers not authorised to give regulated advice could be confident that, by keeping to the guidelines, any advice they give does not cross into regulatory terrain.
He adds: “The standards would draw a boundary which would allow providers of generic financial advice to identify options available to a consumer without making a specific product recommendation.”
The standards will require that where the provider of generic financial advice is also a provider of regulated advice, a clear breakpoint be established so that consumers know when they are moving from an unregulated advice process to a regulated sales environment where individual products and services may be promoted to them.
There will also be a series of outcomes of effective performance to show what the adviser must do; a series of behaviours to show how the adviser must do it; and a list of underpinning knowledge and understanding that the adviser must have. This knowledge may be a combination of general, industry specific and context specific, says the FSSC.
The FSSC is launching a consultation process to seek the views of the industry on the draft standards. They have been developed as part of the FSA’s National Strategy for Building Financial Capability, with contributions from organisations such as the Association of Independent Financial Advisers (Aifa), Barclays Bank, Citizens Advice, HSBC, National Savings & Investments and Which?
Lucy Courtenay, FSSC standards and accreditation director, says: “Consumers will grow to recognise that all providers working to the standards, regardless of their affiliations, will offer a common level of service, and that the generic financial advice process is not designed to sell them products and services.”
Courtenay says the standards are voluntary and can be used by not-for-profit organisations, such as Citizens Advice, as well as advisers in the financial services sector.
The generic financial advice standards consultation period will last until 6 January 2006. The FSSC is inviting views by email or by a series of industry meetings around the UK.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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