Kepow! Splatt! Biff! The scrap between the government and pensions industry has made entertaining viewing.
First the chancellor laid in with warnings of a charge cap on companies that appear to be using the pension freedoms as another opportunity to fleece investors.
Then the Association of British Insurers hit back with proposals for a customer control exit to allow people to take their money without paying for advice.
Caught in the middle are investors who just want their money – as the government has promised.
Let us face it, the idea of forcing people to pay for advice if they want to access pensions with guarantees might look nice on paper but it is an abject failure in practice.
Let’s face it, the idea of forcing people to pay for advice if they want to access pensions with guarantees might look nice on paper but it is an abject failure in practiceLet us leave aside the theoretical and potential liabilities for financial advisers, because that has been debated in detail.
The reality is that £30,000 is not that much money, and to lose £1,000 or more in fees is a significant chunk – probably close to a year’s income even with a decent guaranteed annuity.
We have already seen daft cases such as one highlighted last week where a 64-year-old man battling throat and lung cancer has been told he cannot withdraw his pension to visit his son’s grave overseas – because he has a 9 per cent income guarantee.
He spoke to four financial advisers who wanted up to £2,000, and still would not help him get his money.
Pensions minister Baroness (Ros) Altmann did not mince her words in her maiden House of Lord’s speech. “Too many firms are not offering many new options to their customers, or are imposing hefty charges, lengthy delays or exit penalties on those wishing to transfer to other providers.”
Take note of this part particularly: “There are some who say the financial industry or the government know best what people should do with their private pension and that most people can’t make sensible decisions for themselves. Well, I disagree. I have long been an advocate of trusting people with their own money.’
She also noted how the previous system most benefited the wealthy, and underlined the “strong reasons for people to keep pensions rather than spend them too soon” and the increased incentives to save.
These included removing the 55 per cent tax on death and allowing pension savings to pass to the next generation free of inheritance tax.
Pension firms would do well to take note that both she and the chancellor want little truck with firms that appear to be doing their utmost to make life as difficult as possible for those seeking to use the new pension freedoms.
The government is on the warpath. Baroness Altmann has emphasised that consumer rights will not be left “to play second fiddle to the interests of large financial firms”.
You have been warned. Get your houses in order now or the government will do it for you.
Fos wants rapid response from firms
Good news for consumers – and no doubt something else to set some in the industry whinging – is that Fos is demanding faster responses in an effort to resolve disputes more quickly.
While the 14-day response time will still apply for complex cases, they will expect an answer straight away by phone or email in most instances.
This is perfectly reasonable given that the technology should be at hand to provide an instant response.
In addition, the company should already have gathered all relevant information – if it was taking the consumer’s complaint seriously before it reached the ombudsman.
And from the company’s point of view, I cannot see how it helps to put an issue to one side rather than dealing with it instantly. Surely that just wastes more of the company’s time?
Fos’s aim is to resolve most complaints within three weeks.
Quite right too. Most people will already have waited several weeks or months before going to the ombudsman. Firms should not be allowed to delay the process further.
At-a-glance pension passport trialled
Also on a positive note, it is good to see that LV= has begun to roll out its pension passport designed with the Treasury.
The document is clear, and presents relevant information that should be needed by someone coming up to retirement.
On one page there is the pension value, provider, reference numbers, additional details such as any guarantee and what to do next.
No more hunting through pages and pages of small print to find the details you really need. It is all just there.
Tom McPhail of Hargreaves Lansdown and Money Mail’s editor James Coney have been long-time campaigners for pension passports.
This is just the start.
One day all financial information may be this clear.
Tony Hazell writes for the Daily Mail’s Money Mail section
