Free financial advice could soon be available on the high street, offering guidance on everything from saving and budgeting to pension planning and coping with debt.
A report commissioned by the Treasury, published today, proposes introducing a national personal finance service to offer generic advice to people over the telephone, the internet and face-to-face on the high street.
At the same time, the government has pledged to invest £12 million in a regional pilot scheme to test how free advice can be offered to consumers.
If the government’s proposed pilot is a success, a national personal finance advice service could be introduced. The service, which would be funded by the government and the financial services industry, would not actually recommend or sell specific products to people.
Instead, it would offer information and guidance to people on a range of personal finance issues including savings and borrowing, tax and welfare benefits, and retirement planning.
Otto Thoresen, chief executive of insurer AEGON, who was appointed to carry out the report by the Treasury, said: "I believe that good money sense needs to be as much a part of people's lives in the 21st century as healthy eating and keeping fit.
"'Money guidance' will help people deal with the money matters that shape their everyday lives - budgeting their weekly or monthly spending, saving and borrowing, insuring and protecting themselves and their families, retirement planning, and understanding the technical language that we in the financial services industry too often use."
Thoresen claims that access to free and impartial financial guidance would leave as many as 2,060 consumers up to £15 billion better off.
Yvette Cooper, chief secretary to the Treasury, said the government's pilot will last two years. She added: "Getting some free, independent and trusted guidance can make all the difference and can help families manage their budget and get a better return on their savings. It could also help prevent people getting ripped off by loan sharks or caught out by the small print on a dodgy financial deal."
The Treasury commissioned the report in response to rising personal debt in the UK and a high level of financial illiteracy.
Figures from Credit Action show Britain's personal debt is increasing by £1 million every five minutes, bringing the total amount owed to a whooping £1.4 trillion.
Experts also say that people in financial difficulty do not seek help as they are unaware that free debt advice is available to them.
Joanna Elson, chief executive of The Money Advice Trust, said three in five people do not seek debt advice. She added: "If you do get into difficulty, seeking advice as soon as possible is the best option to help you sort out your problems. There is always something that can be done and the earlier you seek advice the more options you will have."
Despite living in one of the most financially sophisticated countries in the world, many Brits lack a basic knowledge of how to manage their money.
Moneywise is campaigning for personal finance to be introduced onto the National Curriculum so that the next generation has the opportunity to learn about financial products and managing money at a young age.
To show your support please sign our e-petition on the Prime Minister's website.
'You can take a horse to water...' Read Rachel Lacey's blog on the proposed free advice scheme.