TISA calls for the creation of a kitemarked guidance framework
• TISA research identifies low levels of financial security and wellbeing as a result of borrowing rather than saving
• New recommendations would help to re-establish a savings culture in the UK
• A guidance framework to help low and middle income earners, in particular, to enhance their financial wellbeing
• Eight recommendations outlined as part of response to Financial Advice Market Review (FAMR) to address consumer need for support in managing financial affairs
TISA, the financial services membership association, has called for the creation of a guidance framework that supports low and middle income households in enhancing their short, medium and long-term financial wellbeing. These views build upon the proposals developed in March 2015 by TISA’s Savings and Investments Policy project(1), (‘TSIP’, ‘the Group’) as part of a detailed set of recommendations to re-establish a savings culture in the UK and incentivise long-term saving.
Research(2) reveals that 12 million people are not saving enough for retirement, with two thirds of people not knowing how much they need to save for retirement. It warns that this clearly demonstrates the low levels of financial security and wellbeing as a result of borrowing rather than saving; failing to budget or plan financial matters and not putting enough aside to create adequate retirement pots.
TISA has outlined its response to HMT and FCA’s consultation on Financial Advice, making eight key recommendations on ways to re-establish a savings culture and to address the mass-market need for support in managing their financial affairs:
1. Increase financial capability – this is critical to re-engaging consumers with their personal finances and providing them with an understanding of the importance and benefits of personal financial management
2. Clarify the difference between guidance and advice – provide clear definitions of guidance and advice, through implementing a form of restricted, regulated support for consumers, focusing on specific savings needs, allowing consumers to make informed saving choices
3. Define a kitemarked guidance framework – that can be adopted by financial services, government backed organisations and the third sector so that the consumer has a consistent experience regardless of where they seek guidance
4. Acknowledge housing as a savings option being adopted by consumers – so that consumers are encouraged to consider the practical aspects of using their home as a means of income in retirement
5. Permit human guidance support with the guidance framework – helping people to understand key concepts and the options available to them
6. Focus on outcomes – that provide consumers with guidance on outcomes that will meet their needs
7. Create a standard, portable fact find and financial plan – to encourage consumers to review their financial plan on a regular basis
8. Increase consumer access to, and demand for, kitemarked guidance – to encourage greater engagement with their broader financial planning
David Dalton-Brown, Director General of TISA said:
“Over the past 20 years, the UK has experienced considerable changes in both the amount and the way that consumers save. Encouraging people to save more goes beyond just new regulation. It is about creating new cultural norms and enshrining a shift in responsibility for personal financial security from the state to individuals.
“Building on the original TSIP proposals in March 2015 regarding increasing public access to generic guidance, we are looking at financial advice from the perspective of how to develop a solution that meets the needs of the mass market, who typically have limited savings and for whom a guidance solution maybe a good alternative to advice.
“Our recommendations aim to help consumers enhance their financial resilience and security, through a kitemarked guidance framework. We hope that our views are strongly welcomed by HMT and the FCA and look forward to working with the financial services industry to provide support for consumers to seek better guidance and advice, in order to enhance their financial welling, and help to re-establish a savings culture in the UK.”
Ends….
For further information please contact:
Alistair Kellie – Telephone: 020 7680 6558 / Email Alistair.Kellie@newgatecomms.com
Email: TISA@newgatecomms.com
Notes for Editors
TISA is a not-for-profit membership association operating within the financial services industry. The focus of our recommendations and actions is improved outcomes for consumers and UK plc with this approach leading to a stronger UK financial services industry.
TISA’s growing membership comprises over 150 firms involved in the supply and distribution of savings and investment products and services. These members represent many different sectors of the financial services industry, including asset managers, insurance companies, fund managers, distributors, building societies, investment managers, third party administrators, consultants and advisers, software providers, financial advisers, pension providers, banks and stockbrokers.
Having a legacy of focusing predominantly within the tax incentivised products area, TISA has in recent years moved into the broader savings and investments world, extending our standing as trusted adviser over a much greater remit.
TISA has a successful track record in working cooperatively with government, regulators, HMT, DWP and HMRC to improve the performance of the industry and the outcomes for the public. Effective policy and regulation and the creation of efficient industry infrastructure continues to be the major focus for our members. TISA is unique in that it represents the entire financial services industry, incorporating cross-sector policy, industry and technical expertise. Whilst we maintain a solid partnership with government, the regulators and wider industry, we remain independent and develop neutral views and opinions. This impartiality is reflected in our ability to drive development projects which improve industry performance and consumer outcomes, putting us in the unique position of being able to constantly challenge the status quo to bring about material improvement.
(1) The Savings and Investments Policy project is working with a wide range of financial service companies, trade bodies and consumer groups to develop these pan-industry proposals. It is directed by an Executive Committee formed of 19 leading financial services companies including Aviva, AXA Wealth, BlackRock, BNY Mellon, Columbia Threadneedle, EY, Genpact, Henderson Global Investors, Invesco Perpetual, J.P. Morgan Asset Management, Legal & General, Lloyds Banking Group, Nationwide, Northern Trust, Old Mutual, Openwork, Pinsent Masons, RBS and TISA.
(2) MAS 2015