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.
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 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 earning below an annual income of £100,000 will not pay at all.
The FCA said in its policy statement that the reason for the levy reduction was that financial advisers would be unlikely to benefit in general from the guidance guarantee. It said: “Firms that provide financial advice will only benefit if, following using pensions guidance, consumers seek advice from regulated financial advisers.
“However, the firms in the other four product provider fee-blocks will more likely benefit as the monies released through greater pension flexibility, if used for investment, will be distributed among them.”
Chris Hannant, director general of the association of professional financial advisers, said: “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.”
Robin Keyte of Somerset-based Keyte Chartered Financial Planners, said: “The guidance guarantee 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 if the cost has been reduced that’s all good news.”