Pensions 

Guidance guarantee not designed to replace independent financial advice

The government guidance guarantee is not intended as a replacement for independent financial advice, Maggie Craig, acting head of saving, investment and distribution at the FCA, has said.

Speaking after a poll conducted among delegates at the National Association of Pension Funds annual conference in which 73.3 per cent of delegates believed members would not take further advice, Ms Craig stressed that the guidance guarantee was not designed to replace independent financial advice, but to help people make a decision about how to approach their financial future.

She said: “It is designed to help people make the most of their savings. There will be more complexity, because there will be more options.”

However, only 7 per cent of delegates thought occupational scheme members would actively seek out independent advice.

The FCA has yet to release details of how the guidance guarantee will be delivered, but Ms Craig said it was anticipated it would be released in late autumn, though she could not give a date.

However, she said the guidance service would be delivered under a single brand across multiple channels, including telephone and online.

“Guidance must also deliver relevant personalisation, but individual choice,” Ms Craig added. This might result in the service suggesting that individuals seek independent advice if they have complex requirements, but also where appropriate, debt advice.

She also acknowledged there was “much work” to be done across multiple agencies to ensure delivery of the guidance service before the April 2015 deadline set by chancellor George Osborne.

Adviser view

Andrew Cheseldine, a partner for national pensions adviser LCP, said 2015 may not be soon enough for many retirees. He said: “Tax rates won’t be issued by then and many people retire in the first quarter of the year to maximise their tax savings. It is not trivial to say you won’t have the tax rates available until later in the year.”

He added: “As the tax status of members is a crucial consideration, I question whether guidance will provide individuals with anything more than a cursory consideration of this. Will George Osborne ensure there is enough money for the new service to do a good job helping people to save tax?”

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