AE provider’s problem & ‘safe advice’: week in news

AE provider’s problem & ‘safe advice’: week in news

The shortcomings of professional indemnity insurance, whether safe advice is suitable advice and an auto-enrolment providers problems dominated headlines this week.

As is tradition, here is our round-up the biggest stories on the website over the last week:

1) Safe doesn’t mean you won’t be sorry

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The Financial Conduct Authority told advisers safe advice is not necessarily the right advice.

Speaking at the Distribution Technology annual conference, Rory Percival, the FCA’s technical specialist, said he has encountered examples of advisers recommending their clients do not transfer out of their defined benefit pension even when it would serve their goals.

Decisions are being made out of fear of the regulator, not based on what is best for the client, he said.

Mr Percival said: “There is a preconception with advisers that you can only advise on doing the safe thing, but it is not, it is about advising on what meets the client’s objectives - sometimes that might be advising to do something you might not do yourself.”

Rather than sale the City watchdog Mr Percival’s comments were supported by advisers.

His remarks about “safe advice” also sparked much debate in FTAdviser’s comments section about how you wish the Financial Ombudsman Service shared the regulator’s view.

Philip Milton wrote: “I think Rory needs to start by convincing the Fos or dare I say the Fos needs to be ‘ruled’ by the FCA’s rules, guidance and expectations.”

2) Auto-enrolment troubles

Now: Pensions has been unable to report late contributions for a year because of technical problems at the beginning of 2015, FTAdviser revealed.

The auto-enrolment provider is now going back through its records to report late payments to The Pensions Regulator.

According to TPR’s code of practice, trustees of DC occupational pension schemes must report a material payment failure to the regulator and members within a reasonable period.

The problem stems from when Now: Pensions migrated around 400 companies it provided pensions for onto its new administration platform with JLT at the beginning of last year.

Also this week, a report funded by the Labour Party found the average worker pays just 4.7 per cent of their pay into a pension.

3) Is the solution replacing old with new?

Baroness Ros Altmann has ordered pension providers to ‘produce new products’.

Her comments came after last July the Financial Conduct Authority found 18 per cent of all pension providers and 50 per cent of the largest 15 firms stated that they were planning to develop further retirement income options.

Speaking at FTAdviser’s Retirement Freedoms Forum this afternoon (2 March) Baroness Altmann said: “The industry needs to wake-up. This is a real opportunity for new products and services.

“I am calling on the pensions industry to introduce more new approaches and make their products more engaging.”

Perhaps we should brace ourselves for the introduction of a Pension Isa in the Budget?