Advisers will pay £4.2m towards the pension freedoms ‘guidance guarantee’ levy, with the Treasury revealing today that the overall initial industry levy for 2015/16 will be £35m.
The Treasury has finally published its update on the guidance service to complement April’s at-retirement reforms, detailing amongst other things the initial levy cost.
In November, the Financial Conduct Authority announced that advisers will only pay 12 per cent of the total cost, while deposit acceptors, life insurers, portfolio managers, and managers of collective investment schemes or pension schemes will pay 22 per cent each.
In monetary terms, this means advisers will pay £4.2m while each group will pay £7.7m. The Treasury’s statement added that the levy will be confirmed in March as part of the FCA’s fees consultation paper.
Rather than incorporate a contingency element into the initial levy, the government has decided to cover any costs above the levy value itself in the first instance. Should costs overrun, it will reclaim any money it is forced to pay out from the subsequent year’s levy.
Elsewhere in the Treasury update there were provisions which will be warmly received by advisers, as it made clear that the guidance will complement professional regulated advice, point consumers to reliable sources of further help, and help consumers recognise the value of specialist help and advice.
“If, for example, a consumer wishes to find out more about annuity products, the service will direct him or her to the Money Advice Service’s annuity comparison table
“If a consumer wishes to look into financial advice, the service will direct them to the Money Advice Service’s financial adviser directory, currently under development.”
The Treasury’s update revealed that “where consumers have needs that fall outside the guidance framework they will be referred to relevant third parties for further help”.
It was previously suggested by the Council of Mortgage Lenders that face-to-face sessions could be as short as 15 minutes. The Treasury revealed today that initial user research has indicated that an optimum length of session of around 45 minutes, although it added that the exact parameters of the telephony and face to face appointments are still being defined.
The FCA clarified in its near-final rules that information about a customer’s pension pot must include, at a minimum, the current value of the pension fund and whether there are any guarantees or other relevant special features that apply to the pension.
This morning the branding and logo were confirmed for the new service, which will operate under the Pension Wise banner.
A landing page has now gone live and website users can now register their interest in the service. Some of those registered will also be invited to participate in the ongoing programme of user testing, pilots and trials.
A public pilot of the online guidance service is planned to start in February. As part of its trials, the Treasury said it will work with the industry to develop and test a “short, simple, standardised product” for communicating all the key information about an individual’s pension pot.
The guidance service team is also working with a behavioural insights team and with industry providers to test the best ways of signposting consumers to Pension Wise.
“Randomised control trials” will examine the effectiveness of different styles, wording and placement of material, as well as the value of more consumer-friendly pension information.
The Pensions Schemes Bill which holds the legislation for the guidance is currently before the Lords, and Royal Assent is expected in February, at which point all of the provisions will take effect.
peter.walker@ft.com, donia.o’loughlin@ft.com
