Advisers have questioned whether the £500 proposed advice allowance would pay for a comprehensive look at people’s pensions – and whether there would be demand for it.
In the final report of the Financial Advice Market Review the Financial Conduct Authority (FCA) and HM Treasury said they would consult on giving people the ability to take £500 from their pension savings to pay for advice.
No date has been set for when this consultation will happen, and the FCA has refused to comment on what the timetable for the proposal might be. The regulator also declined to comment on how it had arrived at the £500 figure.
Data from Unbiased suggested £500 would not be enough to pay for even the fairly simple job of converting a £30,000 pension pot into a lump sum and annuity – which the directory found cost £825 on average.
Colin Thompson, a financial adviser with Hertfordshire-based Provisio Wealth Management, said: “If it encourages people to have advice they wouldn’t otherwise have, then it is a good thing. Whether they should take it out of their pension fund is debatable. If it is someone with a pension pot of only £20,000 maybe they shouldn’t.”