The modern football manager, coached in conservative continental methods, commonly deploys a defensive minded player at the base of the midfield to act as a shield for the back four.
Breaking up moves advancing through the middle, said player will often also drop in between the centre-halves to create a back three and release the wing-backs to raise bloody murder in behind the opposition.
Think Nemanja Matić at Chelsea, Fernandhino at Manchester City or Michael Carrick at United. In pensions terms (come on now, you knew the tenuous link was coming), think life companies and other providers.
To a chorus of social media celebration, the Financial Conduct Authority this week announced that providers will act as a ‘second line of defence’ against attacks from unscrupulous unregulated investment salesmen or plain old irresponsibility.
If you’ve eschewed guidance, or taken it but might still be doing something ill-advised - or non-advised - that 45 minutes with the Citizens Advice Bureau hasn’t managed to dissuade, your provider will now be encouraged to push back and make sure you know the consequences.
We don’t know much of the detail yet, but outlining the plans in a ‘Dear CEO’ letter, the regulator said this would involve asking personalised questions and giving out rounds of additional risk warnings written in plain English.
The plans were trailed to FTAdviser last week by Steve Webb, who said he’d been pushing the FCA to allow providers to push the boundary of advice as a preventative measure against bad decisions. For the record, the FCA itself told our parent paper it was not pushed into the move.
Ros Altmann and other similarly panicked pensioner advocates were passionately in support. Devil in the detail and all that, but wonderful news and back slapping all around.
Think Nemanja Matić at Chelsea, Fernandhino at Manchester City or Michael Carrick at United. In pensions terms, think providers.Quietly, though, and especially among those providers that will be tasked with carrying out this protective role, concerns were being raised over how far this would extend and whether, crucially, concerns over client detriment were eroding the very purpose of the freedom reforms.
Aegon echoed comments it had made publicly following our Mr Webb’s revelations by warning the plans “could become disproportionate and undermine consumer confidence in the reforms”. Zurich agreed and urged a “balance between helping customers to achieve a good outcome and delivering a positive customer experience that is not overly demanding”.
Adrian Walker, Old Mutual’s retirement planning expert, added: “Simply highlighting the fact there could be tax consequences when taking pensions as cash should be seen as the bare minimum requirement.”
Another provider told me this week it was reluctant to be cast in a role where it is “doing the regulator’s job for them”.
Just as many managers and fans reacted to the 4-2-3-1 formation which was so defensively-orientated that a good many games at the 2008 World Cup were asphyxiated into lifeless goalless draws, so too an overly cautious approach could eviscerate this pensions revolution.
In short, and as I’ve said before, we must accept the risks that come with ‘freedom and choice’. Some people with smaller pots will take the cash for a spending spree, most probably won’t, and a few will be drawn into scams and lose the lot.
Look at some of the pensions liberation complaints we’ve already seen, such as the man who transferred his NHS pension fund to a scheme offering high returns from storage assets in the north of England. £367,000 of retirement savings may be lost forever.
I support the changes announced by chancellor George Osborne, which have breathed new life into the abstruse at-retirement market. But there will be some losers.
We should seek to limit these and I think, done well, the FCA’s announcement could be an effective part of what must be an education solution, but the detail must ensure that providers are not afforded too much power or responsibility to overstep their mark.
Which brings me to the best part about the regulator’s missive: its focus on advice.
Just as the eventual rules on the guidance guarantee signposting had done, this letter also highlighted prominently the importance of referring and recommending regulated advice to clients who may otherwise make poor choices.
As Karen Barrett, chief executive of Unbiased, told me this week, this was great news because where before it was buried in pages of arcane rules, the fact that this push came in a straightforward two-page letter “puts a very big flag up” for intermediation.
That’s good news for you and is the right approach for all. Otherwise we risk allowing our fears to force us into an own goal.
ashley.wassall@ft.com
