Defined Benefit  

Three ways to fix contingent charging problem

Ms Ingram said: "Few providers facilitate this. I would like to see all pension providers facilitate this, and for those who offer flexible drawdown for it to be mandatory.

"Giving people flexible choices which require them to take more responsibility without also giving them a means of accessing professional advice is unfair.

"Not offering pensions advice allowance can lead to consumers being too dependent on guidance from their provider. This presents obvious conflicts of interest and less protection for the consumer."

However, the FCA has recently claimed access to the pension advice allowance was "prominently advertised" in correspondence sent to consumers approaching retirement.

The Pensions Advisory Service (Tpas), which is now part of the new Single Financial Guidance Body (SFGB), has also defended a ban on contingent charging.

In its submission to the committee inquiry, Tpas stated that one way to help consumers would be for the government to introduce default guidance at the point a cash equivalent transfer value was requested by a scheme member.

This "could help strengthen the integrity and efficiency of the process, by making customers more informed and reducing the number of cases that go on to advice," it stated.

Financial advice firm Intelligent Pensions stated these government-backed guidance bodies were "good initiatives but underused and many people are still unaware of their existence".

In its submission, officials at the firm said: "This is one area where government can really help by continuing to promote free and impartial guidance, as they did initially with the Money Advice Service.

"Guidance services cannot offer advice (and should not have this term in their title), but they can offer balanced information which would help the consumer to understand the cost of advice and the consequences of giving up guaranteed benefits."

maria.espadinha@ft.com