Failure to push a new focused online advice model operated by fully regulated financial advisers is a “glaring omission” in the guidance guarantee that has become one of the key battlegrounds in the Budget shake-up of pensions, according to Royal London.
Phil Loney, group chief executive at the life and pensions firm, said following the Budget shake-up of retirement income options a free and impartial service was needed to help customers to narrow down the retirement options available to them.
In the Budget, chancellor George Osborne said that pension providers will have to provide “face-to-face advice” to all retirees. The consultation that followed qualified that individuals approaching retirement will receive “free and impartial face-to-face guidance” .
It also clarified that providers will be required to facilitate this advice, with a £20m fund provided by the government to help start the process. The Financial Conduct Authority is currently working on the parameters of the guidance that will be received.
However, Mr Loney said that this proposed service, which the government has clarified will be offered through providers, will not be sufficient for many savers, who need access to full advice. The dilemma, he added, was that following the Retail Distribution Review many could not afford full face-to-face regulated advice.
He has instead called for an online offering to be promoted, similar to that highlighted in comments made earlier this year by Martin Wheatley, chief executive of the FCA, in front of MPs that it is it possible to sell a product online and offer advice without human intervention.
This is the second time Mr Loney has spoken out on the changes, after he earlier criticised the plans for placing emphasis for what should be an impartial service on providers.
He said then: “What we really need is industry, FCA and Fos to come together to develop a new form of advice which is fit for purpose for customers looking to maximise their retirement income by taking advantage of the freedoms announced in the Budget.
Mr Loney said: “Currently advice is too expensive for many customers but we believe that the FCA can enable new focused advice delivered through the internet at a fraction of the current costs.
“This is the glaring omission from the government’s current plan to transform our experience when we retire.”
Otto Thoresen, director general of the Association of British Insurers, has separately warned guidance offered to consumers through providers following the radical shake-up of pensions in the Budget will not be the “free” service pledged by the government.
Others have argued that providers can deliver the new guidance pledge, with Prudential for example stating that providers’ ability to give guidance should not be immediately dismissed over objectivity concerns.
Russell Warwick, distribution change director for UK and Europe, said: “While there are clearly differences of opinion as to the role that providers could play in providing the guidance, we shouldn’t overlook the strengths and experience that many providers have in this area.
“These strengths include the ability to identify and access customers who are coming up to retirement, expertise in the existing policies these customers hold and any guarantees included, and experience in providing the majority of the product solutions that are likely to be involved, both before and after retirement.”
Mr Loney’s comments came as Royal London today (28 April) revealed plans to become a household name, by launching its first television advertising campaign in over a decade on Saturday (3 May).
Royal London, which plans to ditch the Scottish Life, Scottish Provident, Bright Grey and Royal London Asset Management brands over the next 18 months, will have new advertising campaign with the tagline: ‘We’re so yesterday’.
