The Thoresen Review will assess cost of offering advice and how to fund it
By Lucy Quinton
Offering generic financial advice will cost the Government and the financial services industry between £40m and £80m.
This was revealed in the interim report of the Thoresen Review of Generic Financial Advice, which was published at the end of October. The review is set to be finalised at the beginning of 2008.
Otto Thoresen, chief executive at Aegon UK and author of the review, said he welcomed further debate on how this cost may be funded ahead of the final review being published.
Phil Hull, product manager at Sesame, said the numbers initially appeared to be large but that, with the cost of running the industry, these were probably not far out. However, he said there were two points to consider. Firstly, whether or not the industry is prepared to pay for this, and secondly, the fact that the Government money will have been raised through taxation, meaning that it is the consumer that is paying for this through another channel.
However, Hull added: "I agree with the need for this service and believe that the figures are not designed to scaremonger."
Chris Cummings, director general of the Association of IFAs, said that, while the organisation supported the review, it recognised that the amount of money specified was "a great deal".
He said: "Funding the scheme should not be restricted to Financial Services Authority (FSA) regulated firms, but should also include the likes of consumer credit and debt management firms. Ultimately, those who pay most should benefit most."
Cummings said the term "advice" should be redefined so that it was "guidance or similar".
Lesley McPherson, head of corporate media at Aegon, said the provider had been in favour of the concept for some time, which is why Thoresen was asked to do this. "As supporters of this concept of generic advice, we are happy to look at funding the proposition in the end in partnership with the Government."
The report stated that generic financial advice should be available to all, but should be designed to attract the groups of people who will benefit the most, particularly the 7.5 million most vulnerable members of society to the consequences of poor financial decision-making. Signposting people to other commercial providers of advice will be an important aspect of this. The report found it was an essential element in improving financial capability, that it was feasible to build a national service and the benefits would outweigh costs.
n To discuss the interim report of the Thoresen Review of Generic Financial Advice in more detail, please visit COVER's website at www.covermagazine.co.uk and log on to the messageboard to register your opinions.
