The Money Advice Service should use its budget to employ advisers to give independent advice to those coming up to retirement to ensure that intermediary costs of taking the open market option do not fall onto consumers, the True and Fair Campaign has said.
The comments from campaign founder Gina Miller follow a pledge in the Labour Party’s pre-election manifesto to ensure pension savers approaching retirement benefit from advice from an ‘independent broker’.
Labour also said it would clamp down on unfair charges and fees and will force pension providers to disclose the full range of charges and transaction costs.
However, while Ms Miller welcomed the promise she said it is important that any independent adviser or broker service is not “lumped in as another intermediary cost”, and instead is “funded and offered by the Money Advice Service”.
Speaking to FTAdviser, Ms Miller clarified that she felt Mas should go beyond its current remit and employ at least two full-time advisers to provide fully independent annuity advice, as well as provide a non-advised whole-of-market tool to help retirees shop around.
She said: “Mas should have an online service as [well as] fund two advisers to do this. They’ve got all this budget and it should be [up to] them to service this market.
“They should offer independent advice in conjunction with an online tool. They have tens of millions to spend and this would be a better use of their money than other things they have spent it on.”
In December, Mas published its business plan consultation for 2014/2015 which revealed it will spend a total of £77.5m in 2014, a drop of just £800,000 compared to the previous financial year. This drop is entirely the result of a drop in the budget related to ‘money advice’ activities, which has fallen by 2 per cent to £43m.
Earlier today, FTAdviser reported on a call from national advice firm LEBC for the Financial Conduct Authority to ban ‘limited’ panels operated by restricted advice firms as well as the payment of commission to non-advised annuity brokers, when it publishes the findings of its long-awaited review on Friday.
Ms Miller added that the group is “particularly supportive” of the pledge to force pension providers to reveal the full range of charges and transaction costs.
Mr Miller said: “This is crucial in providing much needed transparency for savers. It will also ensure that any cap on pension fees is workable, as pension providers will be unable to rip-off customers outside the fee-cap with more hidden fees.”
Ms Miller added that the campaign group hopes the government can make a “similar pledge” to the UK’s savers, to ensure a “fully transparent and competitive pensions industry”.
She said: “Fundamentally, we believe that all fees should be displayed in a uniformed industry wide-format that will give consumers a far better understanding of costs and offer them the ability to compare providers.”
