Consultant Ros Altmann has branded the Pensions Income Choice Association’s adviser retirement directory as ‘misleading’, warning it could force people to buy from non-advised services which claim that their ‘guidance’ is at least as good for the customer as ‘advice’.
The Pick-A directory, officially launched yesterday (13 January), aims to act as a ‘shop window’ for regulated retirement advisers to promote their services to people reaching retirement to increase the number of annuitants that take advice.
The directory is free for intermediaries, who must be authorised by the Financial Conduct Authority, to appear within and free for consumers to use. As at launch, 1,000 intermediaries were listed.
To qualify, an intermediaries’ panels must contain companies that write, in aggregate, at least 75 per cent of the total market’s annuity premiums. There are currently around 12 to 13 companies competing for annuity business.
In comments that have also been published in the national press in The Telegraph, Ms Altmann said the directory does not live up to her high hopes that this would be a “major step” to ensure customers are clear about what they need to achieve “best outcomes”.
In particular, she claimed it is in fact ‘misleading’ in that it implies 75 per cent market coverage is “as good as whole of market” and could lead to consumers still “missing the best rates”.
Tom McPhail, Pica chairman and head of pensions research at Hargreaves Lansdown, hit back against the allegations, stating that the directory does not in any way imply 75 per cent coverage is as good as whole of market.
Mr McPhail did however concede that other criticisms raised by Ms Altmann and others over the wording of ‘guidance’, which the latter had said could “bias against advice”, was valid and that changes were being made that would immediately go live on the website.
Ms Altmann said: “The definition of ‘guidance’ is worded in a way that many will be misled into believing the do-it-yourself route is better for them than using an expert adviser. This is simply not the case and the bias against advice is likely to lead many customers to try to manage the complex annuity process on their own, resulting in sub-optimal outcomes.”
Mr McPhail responded: “We received some useful feedback from IFAs following the launch and on the strength of that we have made some immediate adjustments to the wording, shifting the balance of emphasis on the specific section regarding advice and guidance. That revision should go up on the site today.”
Ms Altmann has also criticised the disclosure of adviser status and fees, saying it was not clear to consumers looking at the directory what was covered for the costs detailed, nor what the difference is between full independent advice and tied sales.
She said: “The directory tells customers that ‘it’s not just about the price. Make sure you understand what you’re getting for your money’. But in the section on advice, there is no description of what a fully independent, specialist whole of market adviser provides for their fee and how much more the advice gives customers than guidance.
“The directory does not distinguish between full independent advice that covers the whole of the market, and tied advisers who only represent certain insurers. A tied adviser can only sell products from a limited range of providers, while a fully independent whole of market provider can access rates from all providers and all products.”
Mr McPhail said that the criticisms could be easily addressed and that Pica would continue to “listen to all feedback”.
He said: “There seems to have been widespread acceptance that the architecture of the website and the customer journey have been well thought out and presented. We are confident that the directory will achieve the purpose for which it was designed and over time will enjoy support from across the intermediary and policy community.
“In the meantime we will continue to listen to all feedback and to refine and improve the directory.”
