FCA in a knot over guidance given by delivery partners

FCA in a knot over guidance given by delivery partners

The much-hyped pension guidance introduced as part of the chancellor’s ground-breaking pensions proposals appear to be leading to confusion with the Treasury and City regulator unable to explain how the forthcoming Pension Guidance will differ from regulated financial advice.

A spokesman for the FCA said that guidance given by its delivery partners – the Citizens’ Advice Bureau and The Pensions Advisory Service – would be different from the guidance given by financial advisers.

The spokesman said it is “not correct” to say the two forms of guidance would be identical. She added: “There isn’t any information that Pension Wise will be able to give that regulated advisers won’t.”

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It is understood the content of the Pension Wise guidance is still being finalised and, given the likelihood of financial advice firms taking several different approaches, that the FCA is not yet in a position to know how it will differ from guidance given by regulated financial advice.

Advisers will be able to provide guidance on pensions but it will be illegal for them to claim they are doing so as part of the government’s scheme.

According to the Pension Schemes Bill, anyone found guilty of providing pensions guidance under the Treasury’s scheme without permission could be jailed for up to 51 weeks in England and Wales or 12 months in Scotland.

It is understood an adviser could find himself in trouble simply for suggesting the guidance he gave was the same as the Pension Wise guidance, thereby suggesting a client does not need its services.

At the end of last month, the FCA released its guidance on distribution models for retail investment advice.

In the document the FCA set out the differences between simplified advice, focused advice, full advice, limited advice and personal recommendation.

Speaking after the paper’s release David Geale, director of policy at the FCA, said: “The paper is about being a help to firms who want to be providing guidance that does not come with the liability of providing advice.

“Some want to provide something less than the full service, maybe look at a need for an individual and decide that the person may need a pension.

“However the Pension Wise guidance coming from the government is completely separate in terms of regulatory remit and it is illegal for any other firm apart from CAB and TPAS and the Treasury to claim it is giving the government’s pension guidance.”

Pension Wise will not be regulated like financial advisers, but will instead have to comply with FCA standards which are designed to ensure it is impartial and the people delivering it know what they are talking about.

When asked why Pension Wise is regulated differently but delivers the same guidance, a spokesman for HM Treasury said: “The guidance provided by Pension Wise will be free and impartial and is being delivered by independent, trusted organisations.

“This means that, unlike regulated financial advice, it will not recommend particular products or providers.