The financial services industry is set to contribute to a government scheme offering free basic advice on financial products to all adults on a nationwide basis by 2012.

The financial capability service will administer advice on transactions such as mortgages and pensions, as well as investment in government schemes such as the Child Trust Fund. A national helpline and local advice centres that link in with IFAs and providers will be integrated into the scheme.

According to the Association of Mortgage Intermediaries (AMI); the costs predicted by the Resolution Foundation are to be £50 million a year, to be drawn from both taxpayers and the financial services industry. The scheme is yet another aim to remedy the high level of adults who are unable to handle basic financial information, often leading to debt.

Ed Balls, Treasury minister, said:
"Financial decisions are difficult. Financial products are too complicated and there is too much jargon. This puts people off, or they can end up buying something that’s not right for them."

Stephen Haddrill, director general of the ABI, Association of British Insurers, said:
"The challenge is to stimulate people to take a greater interest in their financial affairs and to give them more confidence to take advantage of the wide range of advice already around."

"There is a lot of detailed work for the taskforce to do, including on value for money. But this looks like it could create a consensus on the best and most cost-effective way forward."

Chris Cummings, head of the Association of Mortgage Intermediaries said:
"It’s a very positive move. Anything that helps to increase financial capability is a good thing. The reason we’re completely keen on this is that it’s completely focusing on advice. What will be delivered is generic advice and not personal advice. There’ll be a point when generic advice is no longer needed and customers will seek personal advice. If anything this is going to be a major opportunity for professional IFAs."

"The more sophisticated the consumer knowledge, the better choice they’ll make. The better the standard, the more people seek advice, the less they complain. It’s a virtuous circle."