One of the bodies that will deliver the government’s guidance guarantee has said the changes have the potential to create a ‘virtuous circle’, as professionals which were made redundant from annuity firms following the post-Budget crash have begun to apply for roles to deliver the service.
The Pensions Advisory Service, along with the Money Advice Service, will be offering the guidance, following a consultation.
Speaking today (4 September) at the Westminster Employment Forum, Michelle Cracknell, Tpas’s chief executive said it has already received several applications from recently unemployed former employees at annuity providers and this could create a “virtuous circle”.
MGM and Just Retirement have both cut down staff numbers following the changes announced in this year’s Budget.
She said that the organisation would welcome people with five or more years of pensions industry experience, which is half that required for existing advisers at Tpas. Ms Cracknell said this was due to the guidance guarantee’s more focused remit.
However, speaking in the same panel debate Teresa Fritz, an independent consumer finance consultant and member of the Financial Services Consumer Panel, said that those delivering the guidance “must be as knowledgable as IFAs, or even more so” given they need to have expertise in investment, tax and actuarial issues.
Ms Fritz stopped short of recommending actual financial advisers for the guidance roles though, warning that no-one with any kind of stake in selling financial products should be involved.
Yvonne Braun, head of savings, retirement and social care at the Association of British Insurers, said the success of the guidance guarantee was down to correct sign-posting and hand-offs.
“The need for independent financial advice must be highlighted, encouraging more people to speak to advisers is more important than ever due to the increased complexity.”
Ms Braun also warned that time is not on the industry’s side, as we are yet to see the regulator’s roadmap to next April.
Philip Brown, LV’s head of retirement propositions, agreed that “there may be some disappointment from consumers about the range of shiny new products ready for next April, as there are lots of complications to work through”.
He added that while the industry can deliver, the real challenge is to communicate effectively. “This is not just about using easy-to-understand language, it’s about the regulatory cost; we need more uniform ways of talking about risk across products”.
Ms Cracknell also stressed the importance of how the guidance is flagged up to pension savers, pointing out that the majority of people will not read large ‘wake-up packs’ that are sent out shortly before retirement.
“It would be myopic for providers not to signpost guidance in an attempt to keep business,” she added.
