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Personalised financial guidance moves step closer

The prospect of personalised financial guidance has moved a step closer after Harriet Baldwin MP, chair of the influential Treasury Committee, has tabled a motion in the Commons to allow the controversial move.

She yesterday tabled a motion to the Financial Services and Markets Bill, currently going through the Commons, which would pave the way for personalised financial guidance.

If adopted by MPs and passed into law, the move would allow firms to offer financial guidance to customers which would include an element of ‘personalisation’ but stop short of providing full Financial Planning.

A number of providers and trade bodies have been lobbying the government for some time to allow personalised financial guidance to enable more tailored information to be provided to mass market customers who cannot afford full financial advice.

The idea has caused some concern among regulated financial advisers unhappy that the approach may undermine fully qualified and holistic Financial Planning advice.

Ms Baldwin’s amendment to the the bill would allow the Treasury to make regulations to allow “UK citizens to access personalised financial guidance from appropriately regulated financial services firms, for the purposes of supporting them to make decisions which improve their financial sustainability.”

The motion states that the move is aimed at UK citizens who are “unlikely” to have access to financial advice.

The bill amendment states: “Personal financial guidance would mean a communication that is made to a person in their capacity as an investor or potential investor, or in their capacity as agent for an investor or a potential investor; which constitutes a recommendation to them to do any of the following (whether as principal or agent)— (i) (ii) buy, sell, subscribe for, exchange, redeem, hold or underwrite a particular investment which is a security, structured deposit or a relevant investment; or exercise or not exercise any right conferred by such an investment to buy, sell, subscribe for, exchange or redeem such an investment; and that is— (i) based on a consideration of the circumstances of that person.”

Any guidance would not be “explicitly presented” as suitable advice for the customer.

The Treasury would also have the power to modify the definition of “personalised financial guidance”. Before any new regulations were introduced the Treasury would have to consult the FCA. MiFID suitability rules would also apply.

Financial guidance, seen as a half-way house between advice-free execution-only services and full Financial Planning, has not been explicitly banned in the past but providers and others aiming to offer such a service have been nervous about providing personalised financial guidance for fear of falling foul of the regulators.

Trade body TISA (The Investing and Saving Alliance) has welcomed the move.

Prakash Chandramohan, strategy director at TISA, said: “We are delighted that the chair of the Treasury Committee has tabled an amendment that would pave the way for regulated personalised financial guidance, providing better mass market support for consumers with their decision making. In these difficult economic times, it is crucial that consumers have access to targeted and effective support to manage their finances. 

“Since the original Financial Advice Market Review 2015, little has been achieved for people who cannot afford financial advice. Now more than ever, it is important that we build the necessary foundations for people to be supported to make good financial decisions. At TISA, we are ready and look forward to working with MPs, the Government, regulators and all stakeholders to make this possible while safeguarding consumers.” 

AJ Bell also welcomed the move. It said that under the proposed regime, “provided firms did not recommend a specific product or course of action this would not risk being deemed as regulated advice.”

Tom Selby, head of retirement policy at AJ Bell, said: “While in an ideal world everyone would get regulated financial advice based on their personal circumstances, for a variety of reasons this will never be possible.

“The challenge therefore facing Government, regulators and the industry is how to ensure as many people as possible are helped to make the most of their savings and investments. This amendment, if enacted, has the potential to enable substantial improvements in the way information and guidance is provided to non-advised savers.”


• The Government has confirmed that it will not proceed with proposed ‘call in’ powers enabling the Treasury to make, amend or revoke regulators’ rules.



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