The select committee rightly points out that much more needs to be done and that producing leaflets and knocking out some advice on a website does not really scratch the surface of a growing problem. Proposals from Citizens Advice for IFAs to offer free advice, while worthy, also seem to offer little hope of addressing the problem.
Financial exclusion has grown as a problem over the last decade because the most effective mechanism for getting simple protection and savings products into the hands of the less well off was regulated out of existence. Home service insurance – personified by the Man from the Pru on his bicycle – worked. Tens of thousands of vulnerable families had decent basic protection because the insurance man would knock on their door every week to collect the premium, advise on changes in cover when family circumstances changed and provide friendly advice on family finance. It was very old-fashioned, relatively expensive and totally alien to the form-filling, fact find mentality that drives modern regulation. But it worked.
The simple truth is that people on low incomes, desperately trying to keep up with our consumer society are not going to go looking for financial advice. The advice needs to go to them which is precsiely the service the Man from the Pru offered. The challenge now is to find a way of reinventing that concept for the 21st century.
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