Pensions advice constitutes a barrier

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Maggie Craig, the FCA’s head of pensions policy, was quoted last week as suggesting that the industry should not talk about getting advice as if it were a barrier between consumers and their savings.

Well, I am afraid that in the case of pensions with guarantees that is precisely what it is.

People with comparatively modest pensions are facing what they see as prohibitively high fees for advice on whether they should take their pension as a lump sum.

And in many cases they neither want the advice nor are they prepared to act on it. They simply want their money and they want it now, no matter what the future implications, and in spite of any guarantees they will be sacrificing.

Speaking at Marketforce’s Retirement Solutions Forum, Ms Craig also said: “We need to be a little bit careful when talking about advice in these situations as though it was always a barrier, when there were good reasons for putting those protections in place in the first place.

“We are perhaps in danger of forgetting that the idea behind putting an advice requirement in was to protect customers, because customers may not have understood the value of the benefit they are giving up.”

It is a fair point. But perhaps consideration should be given to finding other ways of disseminating that information to consumers without creating an impasse between financial advisers and consumers.

As it is, advisers are being painted as the bad guys because they will not assist those who demand to move their pensions, or because they have the audacity to want to be paid for their work.

“Advisers are being painted as the bad guys because they will not assist those who demand to move their pensions” Tony Hazell

Meanwhile the FCA is adopting a “Not us, guv” approach to the whole issue of insistent clients, leaving advisers to decide whether or not they can safely act against a client’s best interests.

According to a survey by the Personal Finance Society more than eight out of 10 members would refuse such a transaction.

This raises the likelihood that a significant number of people will visit an IFA for possibly the first time in their lives and come away with a bad taste in their mouths.

But why should you help people do something you firmly believe will damage them financially?

Being forced to take advice is not only creating a barrier between consumers and their savings – it is also creating a barrier between consumers and advisers.


Who would buy annuities?

Another issue to spring up at the Retirement Solutions forum was the proposed secondary annuity market.