Advisers have renewed calls for a ‘voucher’ advice system as they dismiss sense-checking Pension Wise, following the regulator telling MPs that it will consider asking advisers to review the government’s guidance system.
Yesterday (16 September), David Geale, the FCA’s director of policy, told the work and pensions committee that, so far, the regulator has not used financial advisers to review consumer outcomes of those who use Pension Wise, when asked whether advisers could do a regular audit.
He said: “We have not used IFAs to review outcomes but that is not something we would [usually] do.”
He added that many of the FCA’s staff are ex-IFAs, “himself included”.
“We have reviewed them against the standards we would look at in our own supervisory processes.”
Mr Geale highlighted that in some cases the regulator used consultants and “for others we use ourselves based on the frameworks we build and the experiences that we have”.
“I take your point, maybe it is something we could do in the future - we’ve not used IFAs to review our services as yet.”
However, financial advisers told FTAdviser they would have no interest in doing this, flagging up that the government should have listened to calls for an advice ‘voucher’.
Prior to the implementation of Pension Wise, advisers called for a voucher system to replace the face-to-face element of guidance, which would give individuals free sessions with fully regulated advisers and would be paid for by government and advisers themselves.
Simon Welch, IFA for Newark-based Sense Financial Solutions, said: “I have no interest in Pension Wise now. It’s like they are reinventing the wheel. The infrastructure is there but they decided not to use it. “
Mr Welch is in support of the ‘voucher’ system as was previously suggested, where people would get a ‘voucher’ for a half hour session with a qualified regulated financial adviser.
“We have got a force of qualified financial advisers with over 20 years experience, who understand pensions and investments. The logical idea [rather than now testing a system] would be to offer a voucher system.
“It was a huge expense to fund Pension Wise for the regulator and inevitably, the industry is paying for it.”
Craig Palfrey, certified financial planner at Penguin Wealth, described Pension Wise as a “noble attempt but unfortunately it is failing”.
He said: “Suggesting that IFAs may carry out audits is honourable but seems to me to be a PR exercise that is six months too late.
“IFAs should, and probably would, find that it is doing exactly what it is supposed to be doing – giving people generic advice about their options but no clearer understanding of their personal situation, personal policy options, the tax implications of taking too much out or how it will affect their future if they follow a certain course of action.”
Mr Palfrey added that Get Financial Advice, a trading name of Penguin Wealth, has pointed lots of people to Pension Wise, but they still come back and want advice “because Pension Wise can’t actually do anything for them”.