• There is undoubtedly a need for financial guidance (both from evidence collected directly and indirectly)
• Both the term 'financial guidance' and its definition in relation to investment advice needs clarification as choosing the right term is important to avoid confusion among consumers and to maximise take-up of services
• The extent and diversity of financial guidance provision varies across countries, In some, regulators and/or national governments have developed websites that deliver financial information, in others such as Germany, regulators do not see financial guidance as part of the scope of their responsibility. In the UK and Germany, consumer organisations play an important role in financial guidance and the Verbraucherzentralen (with a wide network of local advice centres under the umbrella organisation vzbv) are seen as a better practice model for such a service for other EU member states to follow
• There is little information in the public domain about either business models or the detail of funding of financial guidance providers but findings suggests that the costs are much higher than consumers seem willing to pay. This explains why non-industry providers have chosen to provide financial guidance free of charge to consumers or with moderate fees such as the German consumer centres. In the UK detailed cost benefit analyses identified a strong business case for charge-free services with benefits outweighing likely costs.
• Translating the need for financial guidance into use of services is likely to require considerable publicity. If fees for the guidance are charged it is important that they are transparent and kept low to ensure that a wide range of consumers are served. Innovative ways of incentivising use should be explored further and tested with consumers e.g. the idea to have the fee for guidance sessions tax deductible but this could be difficult to implement in practice due to the unlevelled playing field this would create vis-à-vis the professional advice sector. Demand for financial guidance needs to be stimulated e.g. via public awareness activities and specific incentives to encourage use.
• Evidence on the effectiveness and quality of financial guidance services beyond simple measures of an overall level of consumer satisfaction is limited. There are good examples of more nuanced and robust evaluations covering both the effectiveness and quality of services, but these were relatively uncommon. There is therefore a need for more such evaluations to build a robust evidence base on what works - and more particularly what does not work.
• Non-industry guidance providers are generally unregulated, instead often subject to other forms of quality control. Systems of accreditation for financial guidance and liability for poor guidance and redress for consumers needs further work.

Summary of the FSUG recommendations on financial guidance

On the kind of services that should be covered by financial guidance:

• Adopt a unique and comprehensive approach to the concept of financial advice in European legislation;
• Clarify with ESMA whether a pure asset allocation recommendation (without specific product(s)) falls within its definition of investment advice.
• Regulate the terms 'financial advice', 'financial advisers' and 'financial guidance' and create a legal framework for financial guidance to reassure consumers about the quality of service (including qualifications, accreditations, training, professional liability).

For financing financial guidance:

• Put an end to the myth of free advice by requiring 'advisers' paid through commissions to communicate in writing the exact amount of commission to the consumer before 'recommendation' of any financial product, and not only for investment products covered by Mifid 2, PRIIPs and IDD (there is no obligation to disclose the amount of commissions in the latter legislation).
• Consider a consumer awareness campaign on the remuneration schemes used for distributing retail financial services in the EU and their costs for consumers;
• As a second step: commission ban (as in the Netherlands and the UK);
• Allocate fines paid for non-compliance with consumer protection legislation to the financing of financial guidance;
• Require the financial industry to pay a levy to finance financial guidance;
• Transfer the major part of national financial education budgets to finance financial guidance.

On who should provide financial guidance:

• Convince national public authorities they have a key role to play as a catalyst (national body to encourage the development of services, promote their use, share best practice within and across countries, encourage a regime of skills training and accreditation and provide oversight. Optionally, national authorities could provide financial guidance).
• Promote the financial guidance provider function in the private sector and launch a deeper analysis into business case opportunities.
• Create a network of consumer organisations and other organisations representing retail financial end-users capable of providing financial guidance (see VZBV) or at least some financial guidance services.

To encourage consumers to use financial guidance:

• Launch an information campaign on the benefits of financial guidance;
• Develop self-assessment tools, decision trees for the simplest needs, or as a first response.
• Support the development of digital means to provide financial guidance (e.g. as a first step or for straightforward questions) at lower cost to consumers.
• Adopt incentive mechanisms e.g. through a tax deduction;
• Provide a universal right to financial guidance at a small price e.g. every 5 years.

Further FSUG views on the report findings (Extracts from the FSUG position paper):