Pension industry figures have called on the government to make sure any regulation following the consultation on pension transfers will not leave the financially vulnerable stranded without help.
The Money Advice Trust charity, which runs Debtline, said that those in debt should be able to access regulated advice, while Origo, the eCommerce standards and services body for the UK financial services industry, called for protected access for consumers.
In its response to the Treasury’s latest consultation on pension transfers and early exit charges, which ended on 21 October, MAT warned the government to set clear guidelines, as an ‘unclear boundary’ between regulated financial advice and debt advice could leave many people in financial difficulty stranded.
Joanna Elson OBE, chief executive of MAT, said: “Significant questions remain over the impact of pension freedoms on people with debt problems. In particular, there is a real risk that those in debt – especially if they have small pension pots – are left unable to access the regulated advice they need to choose the best pensions product for them.
“The development of Pension Wise has been a positive step, but beyond general guidance, we need to make sure that everyone understands the boundaries between regulated advice and debt advice.”
The Citizens Advice Bureau also called for pension exit charges to be capped at £50 to protect people with small pots in particular, and that such charges should only be permitted where providers face genuine administrative costs of exit or transfer.
Other providers called for clearer, easier transfers and more competition. Ben Cocks, founding director of Altus Business Systems, said that unless customers could easily transfer their pensions from one provider to another, then competition between providers would be “stifled and the new pension freedoms will not have the intended liberating effect”.
In addition to speedy transfers, there must be consumer protection. Paul Pettitt, managing director of Origo, said: “Treasury should remain cognizant that the speed of transfer has to be balanced with consumer protection, effective procedure, appropriate risk mitigation and overhead cost. This is particularly pertinent given the increase in pension fraud and pension liberation attempts.”
The 26-page Treasury consultation document, Pension Transfers and Early Exit Charges: Consultation, was published in July when the consultation was launched.
|Consultation sample questions:|
Process for making transfers more efficient
What constitutes excessive or unfair early exit charges, including a cap?
Impact of legal requirement for independent advice on process for transferring pensions with safeguarded benefits
Process for simplifying advice process for safeguarded benefits
Tom McPhail, head of retirement policy at Bristol-based Hargreaves Lansdown, said anyone wanting to access their pension should be able to do so in 30 days.