Pensions minister Steve Webb hit out at the Financial Conduct Authority during a hearing in parliament this morning (21 October), questioning a lack of “cheap and cheerful” advice options to sit between the ‘guidance guarantee’ and full regulated financial advice.
Mr took the opportunity at a Pension Scheme Bill committee hearing to raise the issue with the Financial Conduct Authority’s director of policy David Geale and its director of policy, risk and research Christopher Woolard.
Mr Geale admitted that there was “not a lot in the middle”, but he stressed there is “something there, although it’s not widely used”, which could be a reference to the plethora of online portals which sit between execution-only and advice services.
He added that a recent FCA consultation had asked the industry whether they needed to do more in regulating for the space between execution-only and full advice.
He said there were “a number of firms and trade bodies” who were interested in offering something more mass market, before adding: “Watch this space would be my take”.
Mr Geale noted that the existing framework was also flexible enough to enable employers to give something more cost effective to employees, like “fixed fee advice on decumulation options”.
The guidance guarantee service is set to be implemented in April 2015, with the Pensions Advisory Service and the Citizens Advice Bureau confirmed yesterday as the main delivery partners.
Mr Woolard added that the IFA community is not one single mass and there are different business models out there.
He said: “There are advisers saying they would serve this market, it’s not a single picture”.
Mr Webb went on to question the safeguards in place to protect consumers that decide not to access guidance, with Mr Geale responding that the FCA would want to see how far it badgers people that do not take up the service.
Later in the session the committee questioned Michelle Cracknell, Tpas chief executive, which was confirmed as being the delivery partner for the guidance telephone service.
She estimated that 25 per cent of retirees will take up guidance from next April, rising to 75 per cent in the future.
Ms Cracknell also explained that a current average at-retirement phone call takes 25 minutes, so estimated that a guidance call should take around 45 minutes, including preparation and report.
She told the panel that applicants for the roles fo giving guidance would have to have 10 years of relevant experience and a training programme of two months, noting that current salary ranges for TPAS technical specialists were between £35-45,000 per annum and between £25-30,000 per annum for assistant technical specialists.
For the new guidance delivery personnel the pay would be around £30,000 a year, a level that was tested with some recruitment agencies.
peter.walker@ft.com
