Understanding ‘advice’ and ‘guidance’ on investments

If you’re looking to invest your money, there are a range of organisations that can offer you financial ‘advice’ or ‘guidance’. Learn about some of the differences between these services.

Purchasing financial products such as shares, bonds, funds, some types of insurance, and pensions is often a big decision and commitment.

If you are thinking about getting some help with the decision, it’s important you are aware of the differences between advice and guidance services. 

While firms must be clear with consumers about the actual services they provide, this guide highlights some key differences to be aware of. 

Advice services

Firms often use the term ‘advice’ to mean a ‘recommendation of what you should do’. For example, a recommendation to buy or sell a particular investment.

  • The recommendation is personal to you.
  • It will be based on your specific circumstances and your financial objectives.
  • Only a firm that is authorised by us can provide this kind of advice. 

You can check which firms we regulate on the Financial Services Register. These firms must meet our consumer protection rules.

Guidance services

‘Guidance’ is a much broader term and includes more general information about financial products.

  • It can include information about different types of investments or general principles for you to consider when investing. 
  • It will not recommend a specific course of action to you or give a personal recommendation about how you should invest. 

Guidance can help you understand the different investment options before you decide for yourself how to invest your money. Some people use it to narrow down their options before seeking advice.

Any organisation can offer guidance, including financial services firms. 

Public bodies such as the Pensions Advisory Service, Pension Wise, and the Money Advice Service also offer guidance. These public bodies do not sell financial products and services but provide general free, independent, and impartial financial information.

If you are unclear about whether an organisation is offering you advice or guidance please ask them for more information.

Typical differences between advice and guidance

 

‘Advice’

‘Guidance’

What will the service provide?

It will recommend what you should do, for example, to buy or sell.

The recommendation will be about a specific investment, for example shares in XYZ plc or ABC’s Low Risk UK Shares Fund.

The recommendation must be suitable for you, for example, for your personal financial situation and investment goals.

It will not tell you what to do or which products to buy. The information provided will help you to identify your options.

The guidance might include information about different types of investments or set out general principles for you to consider before you decide what to invest your money in.

Who provides the service?

Advice on products can only be offered by FCA regulated firms (you can check which firms are regulated by us on the Financial Services Register).  

Anyone can provide guidance. Some organisations that provide guidance are regulated by the FCA.

 

Will you have to pay for the service?

You will normally pay a fee for advice.

You should be told about any fees before you are given advice.

Guidance is normally free.

Firms that are regulated by the FCA should tell you about any fees before they give you any guidance.

What are providers of the service responsible for?

Advisers are responsible and liable for the accuracy, quality and suitability of the recommendations they make. 

Guidance providers are responsible for the accuracy and quality of the information they provide.

 

Complaints about the service and access to the Financial Ombudsman Service

If you are dissatisfied with the advice, you should complain to the firm that gave you the advice in the first instance.

If you are not happy with the firm’s response, they reject your complaint or you do not hear from them within 8 weeks you may be able to refer your complaint to the Financial Ombudsman Service.

The Financial Ombudsman Service is a free, independent service for settling disputes between financial services firms and their customers. It has power to award redress (often known as compensation).

 

If you are dissatisfied with the service you have received you should complain to the organisation that gave you the guidance in the first instance. 

If the organisation is regulated by the FCA and you are not happy with the firm’s response, they reject your complaint or you do not hear from them within 8 weeks you may be able to refer your complaint to the Financial Ombudsman Service.

If the organisation is not regulated by the FCA, you will probably not be able to refer your complaint to the Financial Ombudsman Service. But you may have other options and may want to consider seeking independent legal advice.

Compensation if the provider has stopped trading or has gone into administration and you have a legal claim against them

If you have a legal claim against the firm that gave you advice and it stops trading, you may be able to obtain compensation from the Financial Services Compensation Scheme . This will depend on your legal claim satisfying the requirements of the compensation scheme.

If you have a legal claim against an FCA-regulated firm that gave you guidance and it stops trading, you may be able to claim compensation from the Financial Services Compensation Scheme. This will depend on your legal claim satisfying the requirements of the compensation scheme.

If the organisation that gave you guidance is not regulated by the FCA, you cannot claim compensation from the Financial Services Compensation Scheme, but may wish to seek independent legal advice.

Public bodies that help consumers

The Financial Conduct Authority

We do not help consumers with particular investments. But our website has information on:

The Pensions Advisory Service 

Provides free independent and impartial help on all your private pension matters.

The Pensions Advisory Service:

  • has pension specialists who can discuss any issue you may have with your pension
  • can be contacted over the phone or online
  • offers information and tools through its website

Pension Wise

Gives free and impartial guidance to consumers aged 50 or over to help them understand their options for personal or workplace pensions.

The Money Advice Service

This free and impartial money advice service provides:

  • guidance to help improve consumers’ finances and money management
  • tools and calculators to help consumers keep track of their finances and plan ahead
  • support over the phone and online

The Financial Ombudsman Service

The Financial Ombudsman Service can look into problems involving most types of money matters - from payday loans to pensions, pet insurance to PPI.

If they decide someone's been treated unfairly, they have legal powers to put things right.