The benefits of allowing providers to supply financial guidance to retirees should not be dismissed out of hand over objectivity concerns, a director at Prudential has argued.
Russell Warwick, distribution change director for UK and Europe at Prudential, has responded to outcry from the industry that providers are not able to provide objective guidance to customers.
Following promises in the Budget that every retiree would have access to free financial guidance, Association of British Insurers chief executive Otto Thoresen said pension providers had committed to giving every customer a chance to speak to them about their retirement income options.
However, Royal London responded warning that providers should not be tasked with delivering what should be impartial advice.
Mr Warwick has waded in to the argument, saying that providers’ ability to give guidance should not be immediately dismissed.
He said: “While there are clearly differences of opinion as to the role that providers could play in providing the guidance, we shouldn’t overlook the strengths and experience that many providers have in this area.
“These strengths include the ability to identify and access customers who are coming up to retirement, expertise in the existing policies these customers hold and any guarantees included, and experience in providing the majority of the product solutions that are likely to be involved, both before and after retirement.
“Therefore dismissing out of hand the potential benefits of including product providers as part of the eventual solution seems in our view to be short-sighted at best.”
Mr Thoreson later told MPs that face-to-face guidance for every retiree could cost £120m. He said the guidance would only be “free to the consumer in the sense that they won’t be writing out a cheque and it will be paid for...by the industry”.
Mr Warwick added: “Many views have been expressed recently on who should or shouldn’t deliver the guidance. But in our view it seems rather academic to debate who should deliver it until we have fully defined what the service is going to look like.
“At this stage the key focus for the industry, regulators and policymakers should be to work together to define the best practical solution for giving this guidance to people at retirement. Once this has been defined we will be far better placed to draw sensible conclusions on who is best placed to deliver the guidance.
