PensionsOct 4 2018

Government told to pay for pension guidance

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Government told to pay for pension guidance

The government should put measures in place to give people struggling with pension freedoms free financial help as not everyone will require advice from regulated advisers, a conference heard today.

Financial advice from regulated advisers does not suit everyone and there should be a push for "informal help", Margaret Snowdon, non-executive director of The Pensions Regulator and chairwoman at the Pensions Administration Standards Association, said today (4 October).

At XPS Pensions Group's annual conference, Ms Snowdon said the government should pay for people to have financial guidance in order to give people security.

Ms Snowden criticised the introduction of pension freedoms in 2015 for not being thought out enough and said it wasn't followed up by a provision of financial advice or guidance.

"Pensions freedoms is a good concept but it was introduced very quickly to people who weren't used to having freedom and the freedoms weren't backed up with financial advice," Ms Snowdon said.

"Financial advice from regular advisers doesn't suit everyone, a lot of people's circumstances are quite simple but they do need help.

"There needs to be a push for free and informal help because if people are unadvised, they will end up taking advice from someone unqualified.

"But people don't need to go to advisers for everything and there aren't enough advisers to go around.

"If we really are entering the age where austerity is meant to be over, then the government should put in place measures to make sure people get the help they need with their finances. The government should pay for this."

There are a already number of bodies, such as the Money Advice Service, Pension Wise and The Pensions Advisory Service, soon to be merged into the single guidance body, which provide free impartial guidance on pensions.

However, these are industry-funded. There is also Citizens Advice, which gives guidance on financial matters for free.

The Personal Finance Society has previously asked the government to offer people a voucher for a financial health check with an adviser.

Participating advisers would have been able to deduct a proportion of the cost of each session from their next FCA levy with sessions being delivered by telephone or face-to-face and resulting in a summary of options that might include full financial advice where needed.

Ms Snowden's comments came as the Financial Conduct Authority published its new rules on pension transfer advice in its 58-page policy statement Improving pension transfer advice (published 4 October).

The watchdog said it had found a lack of understanding among advisers between what constitutes guidance and advice in the pension transfer space.

The FCA explained advisers’ triage service for defined benefit (DB) transfers must focus on education and not get into the specifics of an individual's circumstances in case this starts to steer towards a recommendation, which would then be advice.

Ms Snowden said: "I've yet to see the entire statement published by the FCA, however I do hope that it has decided to ban contingent charging." 

The proposed ban of contingent charging was dropped but the FCA said it will return to the issue.

The watchdog stated it needs to carry out further analysis of whether there was a link between contingent charging and suitability of advice.

If it deems changes to its rules around charges "are appropriate", the FCA stated, it will consult further on any new proposals in the first half of 2019.

rosie.quigley@ft.com