THE Government today pledged £12 million for a large-scale trial of a new national money advice service recommended by Otto Thoresen, chief executive of Edinburgh-based financial services firm Aegon UK.
The service, to be known as Money Guidance, will offer general advice on issues such as managing debt, budgeting, retirement planning and understanding financial jargon.
Mr Thoresen said it needed to provide people with knowledge, understanding a
nd confidence to make better financial decisions.
But he stressed that it would have to be impartial and supportive, and stop short of selling people specific products.
The new service was the main recommendation from a 12-month review led by Mr Thoresen, which concluded many people were losing out because the current financial advice market does not cater for their needs.
He said by 2060 consumers could be more than £15 billion better off if they had access to financial guidance, as a result of better budgeting, debt management, shopping around and improved saving for retirement.
People would also benefit from improved health and well-being as a result of a reduction in financial stress. Mr Thoresen said: "I believe that good money sense needs to be as much part of people's lives in the 21st century as healthy eating and keeping fit.
"Money Guidance will help people deal with the money matters that shape their everyday lives – budgeting their weekly or monthly spending, saving and borrowing, insuring and protecting themselves and their families, retirement planning, and understanding the technical language that we in the financial services industry too often use."
Announcing the funding for a pilot scheme, the Government said it wanted to ensure people had access to better help and advice when they needed it, to help stop them falling prey to loan sharks, doorstep lenders and unscrupulous sale and leaseback agents.
Chief Secretary to the Treasury Yvette Cooper said: "People have to make serious financial decisions at every stage of their lives.
"Getting some free, independent and trusted guidance can make all the difference and can help families manage their budget and get a better return on their savings.
"It could also help prevent people getting ripped off by loan sharks or caught out by the small print on a dodgy financial deal."
Hector Sants, chief executive of the Financial Services Authority, which will run the two-year pilot scheme, said: "Many consumers are not equipped to make informed decisions about their finances and can fall victim to the consequences."
It is estimated a national service would cost up to £1.67bn to set up and run between 2009 and 2060 and Mr Thoresen said this should be split between the Government and the financial services industry.
He said the benefits to financial services companies would significantly outweigh the cost to the sector of paying for the scheme.
