Zurich has raised concerns over financial advisers having to pay part of the levy for the government’s proposed at-retirement ‘guidance guarantee’, suggesting that the contributions of advisory firms should be capped.
In its submission to the Financial Conduct Authority’s consultation on the new service, the insurer stated that “it would be illogical for advisers to be priced out of the market by a service that is designed to help increase customer understanding”.
Zurich pointed out that as there is a risk of underestimating the cost of the service because it is difficult to ascertain the extent of future political intervention and consumer demand, the burden of the levy on investment advisers should be strictly limited.
“It would not make sense if the burden of the levy caused a reduction in the number of fully qualified advisers that were able to operate in the post-retirement space, given the important role that an affordable advice sector has to play in these reforms,” read the submission.
“For example, providers who are purely in the pension accumulation market are already subject to a charge cap, so it does not seem fair for fee blocks that contain providers who are largely in this space should have to contribute.”
The firm also noted that if advisers receive few clients as a result of signposting from the guidance service, it is not reasonable for this sector to pay a significant proportion of the costs.
Zurich also suggested that the rules should be made so that pension providers can pass on customers’ information to the guidance service.
In July, the FCA published its consultation whereby it revealed there are three possible ways in calculating the guidance levy.
Option one means that advisers will be paying 30 per cent of the levy; under option two everyone pays an equal 20 per cent, and under the third option, the allocation will be “in line with consumers’ retirement choices”, meaning the allocation will take into account the significance that various financial products and services play in consumers’ retirement choices.
Last week, the Association of Professional Advisers warned that a levy to fund the guidance guarantee would be “unfair to advisers and consumers” and could swallow up to 5 per cent of advice firms’ retained profits.
Apfa has called for changes to the proposals for a levy to be based instead on firm turnover.
Gary Shaughnessy, Zurich UK Life’s chief executive, urged the government to enable employers to offer savers guidance, which would give more people support in planning for their old age.
“Currently, employers provide relatively little guidance and may be worried that they might create liabilities for themselves in doing so.
“Employers’ concerns about the potential repercussions of giving advice could be overcome by introducing safeharbours, similar to a system that works in the US.”
