UK’s new guidance body needs to focus on technology
The arrival of the Single Financial Guidance Body is a welcome streamlining of the UK Government’s approach to the provision of financial guidance to the general population. Merging the three existing bodies, the Money Advice Service, the Pensions Advisory Service and Pension Wise, into a single organisation brings clarity to the services provided by the government.
Although it has yet to be given its official name – the SFGB being an unwieldy working title – the fact that it doesn’t contain the word advice is a good sign. It shows that the body is aware that the use of the word ‘Advice’ in two of the bodies now making up the service was dangerous and could easily confuse the unwary into thinking they were receiving independent advice. This would be a good indication that the final name chosen will avoid that trap.
The merging of the three bodies will make it far simpler for people to access the guidance they need in managing their financial affairs, as this provides a one-stop shop for all financial guidance. This is important as financial health, like physical health, is best looked at holistically rather than siloed into individual areas.
It will also make it much easier to ensure a consistent standard of guidance is delivered throughout the UK. Since the implementation of the RDR, the goal of ensuring that people realise that financial advice must be paid for, and that there is no such thing as free advice, has been hampered by confusion in the public’s mind as to the difference between guidance and advice when it comes to their financial affairs. The new body will be able to ensure that people are aware of the difference between the guidance they are providing and the advice that can be provided from a financial adviser. It will also be in a position to encourage people to buy that advice when it is appropriate.
While it is still early days in the development of the new service, a new strategy has been promised to help develop people’s capabilities in the areas of personal finance and to provide early stage education for the young. Technology is the key to ensuring the education of the young in financial matters. Technology-based education should be seen as a primary way to engage with school children in order to ensure a good basic understanding of the key financial issues that will matter to them throughout their lives.
Indeed, if the goal of the SFGB is to look after people’s financial health, then the system is directly analogous to their physical health in that it is much cheaper to prevent the problems occurring than it is to treat them when they do occur. Accordingly, financial education should be given an equal, if not a higher, priority than solving the problems that occur, as the more financially aware people are, the less likely they are to turn up at the SFGB’s offices looking for assistance.
The new body should make technology-based delivery of both the financial guidance and the education programme the heart of their offering. It is only through the use of automated educational platforms and robo-guidance that they will be able to reach out across the entire population. With a strong technology focus, the new body will maximise the time and resources used with great impact on the overall financial health of the nation. This is an important opportunity that is not to be missed.