Free financial advice service planned

By Jennifer Hill, Personal Finance Correspondent

LONDON (Reuters) - The government has pledged 12 million pounds to test a free service offering advice on personal finance that could benefit consumers to the tune of 15 billion pounds over the next 50 years.

Chief Secretary to the Treasury Yvette Cooper said the government would undertake the "money guidance" pilot project, the main recommendation of the final report of the Thoresen review of generic financial advice.

The report -- the product of 14 months' work led by Otto Thoresen, chief executive of life insurer AEGON UK -- proposes an impartial, sales-free, personalised advice service to help people better manage their money.

Funded equally by government and a levy on regulated financial services companies, the service would cost an estimated 49 million pounds per year, based on four million users per annum.

But it could mean consumers would be 15 billion pounds better off over the next 50 years. It could also save the government some 6 billion pounds and make the financial services industry 5 billion pounds over the same period.

Pledging the funds for the "pathfinder" project, Cooper said: "There's still an advice gap and that's what we need to respond to.

"This is not simply about those who're most vulnerable: it's actually about ordinary families right across the country, to help them make the most of their budgets, the most of their money.

"We think this has huge potential. This now is the challenging stage where we begin the implementation."