The advice process on pensions must be made quicker and smoother, a consulation document from HM Treasury has said.
The 26-page paper, Pension Transfers and Early Exit Charges, acknowledged there were concerns about the requirement for advice, placed on DB pots with a value of £30,000 or more, especially if an adviser recommends against a transfer but the client insists on proceeding.
It said: “The government appreciates that industry and consumers may still be unclear on specific circumstances when independent financial advice is required and wants to understand whether the process for ensuring individuals understand the need for and importance of independent financial advice is operating as intended.”
The consultation seeks to assess the impact of the legal requirement to receive independent advice on the process for transferring safeguarded benefits.
The government also wants to know how the process for seeking advice in relation to safeguarded benefits could be made quicker, smoother, and clearer for individuals, firms and advisers.
It is also looking into how widespread it is for providers to insist on advice before accessing a particular product, and whether pension exit fees should be capped or limited in some other way.
Richard Rowney, managing director of LV Life and Pensions, said: “The cost of advice can damage the value of smaller pension pots and it is not always cost-effective for advisers to offer these savers advice.”
The consultation runs until 21 October.
Adviser view
Keith Richards, chief executive of the PFS, said: “No one wants to see consumers stranded or to restrict the level of freedom intended, but this is currently an unintended consequence [of the requirement for financial advice] which needs to be addressed.”
