Article by Phil
What’s the difference between advice and guidance?
This is a long-standing question, which has raised its head again with the launch of the Department of Work and Pensions new website designed to provide guidance to the public about their pensions. The new website is part of the Governments Your Pension portfolio and also provides links to the useful Money Advice Service website and the Money & Pensions Service website, all of which we support as useful tools to help understand the basics. The problem arises however, when these services are mistakenly described as providing “advice”. They don’t. There is a major difference between the two. People who receive “advice” from regulated Independent Financial Adviser are protected by the Financial Ombudsman Service and the Financial Services Compensation Scheme, in relation to the “advice” they have been provided. When you take “guidance” from the Governments websites you are not being “advised” and therefore you are not entitled to any protection if you mistake the “guidance” for “advice” and make bad investment decisions on the back of it.
We have already provided information about the level of free advice we provide in our Help Topics section.
These unclear messages from Government run websites have been criticised before. Back in 2016, Sue Lewis the former chairman of the Financial Services Consumer Panel criticised definition between the regulatory and common definitions of “advice” and it seems the lessons still haven’t been learned. By all means use the Governments resources for “guidance”, but please don’t mistake them for “advice”.
