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European Commission Project

Consumer Champion is a capacity building programme of the European Commission, managed by the Consumers, Health, Agriculture and Food Executive Agency (Chafea) to support and develop the capacity of consumer organisations and other entities with similar objectives from EU Member states, EEA and candidate countries.

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Financial services

Financial guidance: helping consumers take the right decision.

financial guidance

Taking a financial decision has never been so complicated for consumers. This is why the European Commission and the Financial Services User Group (FSUG) are taking an interest in Financial Guidance.

On 13 June, Better Finance, The European Consumer Organisation (BEUC) and the Observatoire de l’Epargne Européenne (OEE) have organised a seminar to discuss the results of a study on access to comprehensive financial guidance for consumers and debate on the conditions needed for financial guidance.

What is financial guidance?

According to Anne Fily, Special Advisor to BEUC and Member of the European Banking Authority stakeholder group, in everyone’s life there are few essential and trusted persons such as doctors, lawyers and notaries that can be consulted in case of need. The same doesn’t’ happen for financial situations: on average, consumers don’t have the right tools to take informed financial decisions. And the cost of wrong decisions can impact both the society and the private or financial health of anyone. Financial guidance could help fill this gap.

Financial guidance is a process of determining an individual’s financial goals and life’s priorities in order to detail a balanced and realistic plan to meet those goals after considering the resources’ risk profile and current lifestyle. It provides a strategy tailored to a client’s specific situation including cash flow management, education, retirement and investment planning, risk management and insurance planning tax without any recommendation of a financial product.

Being a new concept and a generally unregulated activity, it is currently being discussed and there are still some areas in the definition and terminology of financial guidance that seek clarification.

To better understand it though, the difference between making a financial decision and choosing a financial service must be stressed. Financial guidance is not debt advice, generic advice, or financial education.

Currently, most of the organisations who claim to be financial guidance providers are in fact offering financial advice or products with few exceptions such as the German Consumer Centres members of The Federation of German Consumer Organisations (vzbv). They are able to provide guidance by collecting personal and financial information including reasons for seeking advice, investment goals and horizon as well as knowledge, experience and time able to spend on financial issues, risk aversion and risk-bearing capacity.

If you are curious to discover more about the EU laws and policies regulating financial services, Consumer Champion offers a dedicated online course. Sign up and apply for the Financial Services e-learning module.   

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