The aim of this article is to explain the difference between consumer guidance and consumer advice within the financial services market. The source of this information is the Financial Conduct Authority (FCA).
It is important that individuals understand the subtle but significant difference between the two. In certain circumstances it is a legal requirement to take financial advice, although a starting point in any financial planning decision may well be to initial take financial guidance and then, if necessary, financial advice.
“Guidance”
Guidance is an impartial service which will help you to identify your options and narrow down your choices but will not tell you what to do or which product to buy; the decision is yours.
Providers of guidance are responsible for the accuracy and quality of the information they provide but not for any decision you make based on it.
Guidance is free unless your provider clearly tells you otherwise.
It will recommend what you should do.
Pensionwise, the Pension Advisory Service, the Money Advice Service and the Citizens Advice Bureau are institutions that are only able to provide GUIDANCE.
“Advice”
Advice will recommend a specific product or course of action for you to take given your circumstances and financial goals. This will be personal to you, based on information you provide.
Advice will be provided by a qualified and regulated individual or online by a regulated organisation.
Providers of advice are responsible and liable for the accuracy, quality and suitability of the recommendation that they make and you are protected by law.
You will usually pay a fee for advice. Fees will be disclosed before you are asked to commit yourself. It will suggest what you could do. It will recommend what you should do.