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.”
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.
“However in order to ensure that Pension Wise delivers high-quality and consistent guidance, the government is giving the FCA responsibility to set guidance standards and monitor Pension Wise’s compliance with them.”
A spokesman for the FCA added: “The support and information processes that firms put in place and design must comply with our requirements.
“Only organisations that HM Treasury designate as guidance providers will be able to deliver the Pension Wise guidance.”
Adviser view
Simon Webster, managing director of Kent-based Facts & Figures Chartered Financial Advisers, said: “It doesn’t make any sense but most regulation doesn’t.
“While I happen to think the reforms are fantastic and it is right to introduce some sort of guidance around it, this whole thing has been rushed in and the net result is everyone has been caught on the back foot.”
Clarification
The letter (below) was published on 17 February at the HM Treasury’s request:
The article published on the FT Adviser website on 4th February - ‘FCA in a knot over guidance given by delivery partners’ is, I’m afraid, wholly misleading.
The article asserts that the Treasury and the FCA are unable to explain how the forthcoming government service, Pension Wise, will differ from regulated financial advice. This is untrue.
As we explained very clearly to Mr Fantato, unlike regulated financial advice, the guidance provided by Pension Wise will be free and impartial and it will not recommend particular products or providers. The FCA do not regulate guidance, whether from an independent financial adviser or otherwise. That’s why Pension Wise requires a different regulatory approach and why the Government is legislating to give the FCA responsibility to set guidance standards and monitor Pension Wise’s compliance with them. This will help ensure that Pension Wise delivers high quality and consistent guidance.
The article also claims that ‘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.’ This is also untrue.
As we clearly outlined to Mr Fantato, the criminal offence only captures people who pretend to be offering guidance for or on behalf of the government or who suggest that the information that they provide is part of the service provided by Pension Wise. It is damaging and frankly inaccurate to suggest that IFAs could be prosecuted for simply providing guidance on pensions that is similar to the guidance provided by Pension Wise. As long as they do not pretend that they are giving such guidance as part of the Pension Wise service IFAs will not be at risk from prosecution under the new offence.
