Regulation  

‘FCA cuts in guidance levy proves lobbying works’

The FCA has agreed to slash the levy advisers would have to pay towards the guidance guarantee - with many not having to contribute at all.

The City watchdog has published a policy statement on the guarantee which is included in the pension freedoms being introduced by the Government.

As part of the changes - which mean people aged 55 or over will be able to withdraw their savings - free, impartial guidance will be made available so savers are aware of their options.

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The FCA has now published standards for the bodies responsible for delivering the guidance guarantee along with a fees consultation paper which sets out plans to levy fees to pay for the guarantee.

Following consultation the proportion of levy for financial advisers has been cut to 12 per cent from around 30 per cent while small firms below a fee threshold of £100,000 will not pay at all.

Chris Hannant, director general of Apfa, said: “This is significant progress.

“When the initial proposals were published, Apfa voiced its concerns and with our members we’ve been lobbying the FCA since then for a revision.

“We’re pleased that the FCA has listened to the profession and come back with new proposals that represent a fairer deal for advisers.

“We’ll continue to work hard for advisers, reducing the regulatory burden and holding the FCA to account.”

Portfolio managers, insurers, deposit acceptors and managers of investment funds will pay 22 per cent of the levy each.

The government has announced the Citizens’ Advice Bureau and The Pensions Advisory Service will be the two organisations providing the promised guidance guarantee, set to take effect form April 2015.

According to the policy statement, a provider of guidance must deliver the service for free and do so with “due skill, care and diligence”.

In each session the consumer should be told about the pension entitlement and informed of other sources of information.

The FCA says it will be “proportionate and robust” in its monitoring of guidance providers.

Christopher Woolard, director of policy, risk and research at the FCA said: “Any decision about your pension has far-reaching consequences that often cannot be reversed.

“The pensions’ landscape will fundamentally change from April 2015 so it is important that people get support to enable them to make the right choices about what to do with their retirement fund.

“We want this to work well for consumers and industry and I believe that the standards and rules we have published today strike that balance.”

Adviser view

Robin Keyte of Taunton-based Keyte Chartered Financial Planners, said: “The guidance guarantee I think is important and it has to be paid for somehow.

“Given that the guidance will probably lead to people seeing financial advisers it is fair enough we bear some of the costs, and it the cost has been reduced that’s all good news.”