The article published on IFAonline on 20th November contains some misconceptions about the Citizens Advice Bureau (CAB)/IFA pro bono projects to which we would like to respond to.
In response to the article, we believe there can be no argument that there is an 'advice gap' for people on lower and middle incomes when it comes to financial matters. Research by the Resolution Foundation confirms this.
IFAs are seen in the main as for the better off, and there are trust issues arising from the many mis-selling scandals which people are aware of. Many people therefore either do not address financial planning, including pension provision, at all or they make ill-informed and potentially detrimental decisions and product purchases.
Unless this is addressed not only will individuals suffer, but society as a whole will have to carry the consequences including increasing debt, bankruptcies and reliance on state benefits right into later life.
The CAB service from over 3,000 outlets across England and Wales is dealing with increasing numbers of clients with debt problems. 460,000 people were helped with debt last year, an 11% increase from the previous year, and it is rising year on year. We would like to be part of a preventative approach, rather than just picking up the pieces.
This is why we are exploring how we can use the expertise existing among IFAs to help our clients. We have managed to put together some funding from Barclays and Aegon for which we are very grateful, to allow us to run some exemplary projects for a two-year period. Neither the Financial Services Authority (FSA) nor the Treasury have been involved financially in this initiative, although they are very interested in its outcomes.
The scheme, which will involve 25 CABs and local IFAs, builds on the recommendations of the evaluation of a set of eight pilots run for a short time during 2005. Experience from those projects showed that far from being unwilling to join with CABs in this venture, considerable numbers of IFAs were keen to participate and give something to their local communities. They became volunteers in the local bureau for a few hours a week, giving generic advice only - no products were sold.
By working in the bureau, it was found the service to clients was greatly enhanced because the expertise of bureaux staff in benefits, tax credits and debt complemented the expertise brought by the IFA. Over 79% of the clients dealt with during the project took some action following advice.
We are pleased to say the feedback from those IFAs who participated was overwhelmingly positive. They enjoyed working with a different client group and with the bureaux staff. It is true to say no commercial benefit was achieved for them, but the potential for raising their profile, and combating negative images of the profession made them feel the initiative was worthwhile.
The IFAonline article raised the issue of potential compensation claims in the future for IFAs working pro bono. While they are volunteering in a bureau, they would be classed as CAB volunteers and subject to our insurance cover. As the advice given would be of a generic nature - no products can be sold from a CAB office, nor any touting for business - mis-selling does not arise. However, as any advice on any subject (employment law, benefits claims and appeals, and housing problems) has the potential for a claim in the future it would be important that all CAB protocols, supervision requirements and case recording was adhered to rigorously.
The modest amount of money we need for this project will cover some administrative costs in participating bureaux for appointment management, collation of feedback and outcomes from clients, and collection and collation of statistics. We are also putting in place a co-ordinator to ensure consistency in delivery and monitoring so a full evaluation can be done. There is much to learn about the needs and motivation of this client group, including whether they become product-ready in the longer-term following advice. These projects will make a big contribution to our understanding to underpin future planning.
We would ask those sceptical IFAs who believe they should not work pro bono to look at this again in two years' time when we have the evaluation - and hopefully we can change their minds.IFAonline
Data quality is key
Granted leave to appeal the judgement