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Financial Advice Market Review - Implementation part 1

Response to the consultation

Credit unions often provide financial products and services – primarily savings and loans – to those
at the margins of the financial system and at risk of financial exclusion. These people often seek
support and guidance from their credit union to aid them in understanding and managing their
financial affairs. This is consistent with the fourth object of a credit union as defined by the Credit
Unions Act, namely, “the training and education of members in the wise use of money and the
management of their financial affairs”.

In practice, this generally involves credit unions providing budgetary guidance and support to
members to help them assess the affordability of a loan from a credit union or in tandem with a
loan application to the credit union which might be part of providing a longer-term route out of
indebtedness, through consolidation of debts and reducing interest payments. These are
straightforward and matter of fact issues of spending within your means, the balance between
paying down debts and placing deposits in a simple savings account (i.e. non-investment products)
and the importance of certain priority debts such as rent, tax and utilities.

While the guidance goes some way to reassuring our membership that these commonplace
practices would not be considered regulated advice requiring specific authorisation, we would like
the FCA to go further in its clarification of this point. We would contend that advice ought not to
capture non-complex financial matters of this everyday kind and that the provision of further
examples in the guidance would be welcome in order to clarify this distinction.

The PDF version of this response is available to download from the right-hand side