Opinion  

Pension pot disquiet

Financial Adviser

But they must make sure that the decision to introduce independent guidance for those at retirement is not monopolised by the banks, charities and other untrained people.

In the past we have suggested that part of the £20bn in bank dormant funds, some of it now used for the Big Society, should be used to provide basic financial advice, based on the legal advice system.

Most people during a lifetime of work tend to move from job to job, through periods of unemployment and low pay, but with proper financial advice can often come out the other side in a better position.

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So, those people who want to take advantage of their pensions pots should make sure that they get real independent advice from a properly qualified independent, or restricted, financial adviser, and not some bank branch clerk sitting behind a desk.

But the devil in the detail of Mr Osborne’s changes may be the Financial Ombudsman Service and the threat of mis-selling or mis-advising. Some people may remember chancellor Nigel Lawson, with the introduction of personal pensions, inviting all and sundry, including those with sound defined benefit schemes, to take out the new policies.

A few years down the line, when Mr Lawson had been ennobled and moved to the House of Lords, the FSA had imposed £11bn in fines on the sector for mis-selling.

In freeing up pension pots, Mr Osborne no doubt will in time radically change the industry, but years from now, whoever is in charge at Fos may not share the present excitement of the sector.

We say again: financial advisers must make sure that anyone giving advice (not guidance) on pension pots must be fully qualified and independent – or the very least restricted.

The real moral hazard is who is going to take responsibility for badly advising a would-be pensioner if that person was initially advised by a charity or some welfare worker? Or are we going to regulate pensions guidance?