One of the non-profit ‘advice’ services that has been widely touted as being likely to take up the deliver of the government’s promised retirement guidance has proposed “virtual face-to-face” sessions as the main thrust of a service it believes it could easily scale up to meet demand.
Tpas, along with the Money Advice Service, has been recommended by many industry commentators including the Association of Professional Financial Advisers to deliver the chancellor’s guidance promise of free, impartial and face to face guidance.
The promise is a key element in the overhaul of pensions announced at the Budget this year, which will mean from April 2015 savers have much greater flexibility in how they access their pension.
Earlier this week, the Association of British Insurers presented forecasts in response to the Treasury consultation that estimated an average cost of £36 per person to provide guidance, equating to a total industry bill in its “core” scenario of £7.2m.
The prediction is based on a gradual shift from face-to-face and telephone-based to online from 2016.
Speaking to FTAdviser, Michelle Cracknell, Tpas chief executive, said:“ We would love to [provide the guidance]. We have calculated the business model and how much it would cost and how many people we would need. KMPG came in and calculated it, as they did with the ABI, and worked out it would be an average of £35 per session.
“We could have two sessions per hour and there are three ways it could work: helpline, webchat and a virtual face-to-face session and they would also receive an output document.”
Ms Cracknell said she believes the cost should either be met by a levy on providers or a levy on defined contribution schemes.
The concept of delivering the advice digitally rather than in physical sessions and in groups rather than one-on-one has been cited by a number of responses to the consultation.
Aegon, for example, said in its submission that outlined three key elements to making the service successful, including that the service must include a “digital delivery option” that would be based on “standardised” outcomes.
Speaking to FTAdviser earlier this week, the Pensions Management Institute sounded a positive note on Tpas delivering the guidance but it warned it would be costly, stating Tpas would have to build a system and “a new business model for them to give a proactive approach”.
Mr Cracknell rejected these concerns stating: “We are already doing it so just adding people to an existing infrastructure. It depends on take up [as to how many people we would need].
“We have pension specialists online who can do roughly 12 sessions a day [so] 2,400 sessions a year taking out holidays etc. So 10 specialists would be able to do 24,000; 100 could do more, however we don’t imagine there will be demand for 240,000 sessions.
“Virtual face-to-face sessions are not difficult to deliver.”
She added that the firm recruits people on the basis of their pensions qualifications and their communication skills.
Ms Crackell said: “Some have been advisers before or worked in the technical divisions of pension firms and there is a minimum level of pension qualifications needed.”
If full advice is needed consumers will be referred to advisers, Mr Cracknell added, stating: “We already signpost people to a financial adviser if they need one”.
Research by Unbiased published earlier this week revealed that 92 per cent of 218 advisers strongly believe there should be a mandatory minimum standard of qualification for those providing guidance.
Some 79 per cent stated QCF level 4 should be the minimum standard of qualification necessary for those giving guidance to consumers.
Its research also showed that consumers are confused about their understanding of advice and guidance, attributing characteristics of regulated financial advice to their understanding of what the guidance guarantee means.
When asked what they believe the guidance guarantee will deliver to them, three of the top five attributes given by consumers were features of regulated financial advice, Unbiased found.