The Financial Conduct Authority received 150 responses to its guidance guarantee consultation and intends to issue a policy paper in the “late autumn”, according to acting head of savings and investment Maggie Craig.
Speaking at the National Association of Pension Funds’ annual conference today (16 October), Ms Craig expressed hope the final rules would be in the industry “as soon as possible”, but pointed to the difficulty of trying to establish principles when final pensions freedoms rules are yet to be confirmed.
The FCA published its consultation in January but the government only published the draft Taxation of Pensions Bill in parliament on Monday and it is not yet passed into law.
Ms Craig also reinforced the point that the guidance guarantee is not intended to replace financial advice, a response to criticism from financial advisers and others that guidance could undermine regulated advice services.
She conceded that those outside the pensions world do not appreciate the difference between ‘guidance’ and ‘advice’, but said the key differentiator was that financial advisers have “responsibility”, whereas the guidance is merely there to help people understand their options.
“The guidance is not there to tell them what they ought to do, we’re seeking to achieve a service with relevant personalisation but leaves choice in the hands of the individual,” she explained.
However, a snap poll taken among the audience at the end of the session pointed to a fear that most people would base their decisions solely on what they had gleaned from the guidance session without seeking advice.
The poll asked whether delegates thought members will make a decision based on guidance and decide not to take independent financial advice, to which 73.3 per cent responded ‘yes’. Just 6.7 per cent said ‘no’, while 20 per cent were unsure.
Current guidance plans state that people should come to the sessions with basic information on their pension pots and personal circumstances. Based on this Ms Craig said the conversation would cover income options relevant to the individual.
She noted that the guidance will also cover the consequences of various income options in general terms, with financial advice being suggested for complicated circumstances or debt advice if the person was in financial trouble, as well as other tools to aid shopping around.
Speaking about the content of the guidance sessions, Ms Craig also welcomed the idea of including the mention of things like long-term care and impaired life annuities.
She also confirmed that in practice there will be different organisations delivering the guidance, via different channels, but crucially with one single brand.
“The Treasury’s role is for service design and implementation, designating the organisations to deliver the guidance... the FCA’s role is to develop, set, maintain and monitor the standards of the guidance.
“We will also be collecting the levy to fund the service and supervising the providers that interface with the guidance.”
No more detail was given on the levy, apart from the fact it will not apply to trust-based DC pension schemes. A number of stakeholders have complained over the unfair burden placed on advisers in particular from draft proposals for funding the service.
Ms Craig warned against any subversion of sign-posting the guidance, but added that the regulator did not want to water down any existing good communications from schemes and providers.
“We don’t want to see anyone trying to undermine the guidance, but I’ve not met anyone who wants to do this. People just want communications to fit with official brand,” she stated, adding that as detail becomes clearer, it will be easier to work with.”
peter.walker@ft.com
