The Personal Finance Society has called for the creation of a national retirement guidance and advice service to tackle some of the issues highlighted by April’s pension reforms.
In its evidence to the work and pension select committee’s inquiry into pension guidance and advice, the PFS said Pension Wise fell short of what consumers needed. It also said the existing free government service was unlikely to provide a solution for many who seek a clear recommendation, which would often fall within the structure of regulated advice rather than unregulated guidance.
To tackle this issue, the PFS has recommended creating a national retirement guidance and advice service to provide a retirement options review as part of a clearly defined service for a fixed fee and encourage people to take regulated professional advice through a subsidised voucher system.
Keith Richards, chief executive of the PFS, said: “Despite welcoming the principle of greater freedom and choice, the recent pension reforms are already throwing up a number of unintended consequences, which need to be addressed.
“Consumers must be given a lot more support with the decision-making process.”
Mr Richards also addressed the issue of insistent clients, claiming the issue was being “dodged” and needed to be confronted.
But the FCA, which has also submitted evidence to the committee, said it has made it clear that advice firms do not have to transact for insistent clients.
The City regulator’s evidence to the WPC’s enquiry said: “We have collected data showing that advice firms are sometimes reluctant to take these consumers on as clients as their advice is likely to be not to transfer. Approximately 20 per cent will not take DB to DC transfers at all.
“As a result of these concerns, in June 2015 we published a fact sheet on insistent clients to clarify our expectations.”
The Treasury’s evidence to the committee said: “The government recognises that more could be done to ensure that all consumers have access to the information, advice and guidance necessary to empower them to make effective decisions about their finances.
“In particular, the government recognises the importance of ensuring they are able to access affordable financial advice if they need it.
“That is why the government has launched the Financial Advice Market Review, to improve access to financial advice and thereby support consumers to make informed financial decisions at every stage of their lives.”
The FCA is also carrying out a review into the financial advice market with HM Treasury.
Matthew Harris, financial adviser with Fife-based Dalbeath Financial Planning, said: “Independent financial advice is a valuable and useful product.
“Just like any other product, it is up to the product manufacturer to ‘sell’ the benefits of purchasing their service to potential customers.
“It isn’t the government’s job to promote using an IFA, any more than it is their job to promote using a solicitor to make your will, or using a trained mechanic to maintain your car rather than doing it yourself.”