Opinion  

Letters to the editor: "FSCS makes consumers careless"

Financial Adviser Letters

Financial Adviser Letters

FSCS makes consumers ‘careless’

Caroline Rainbird of the Financial Services Compensation Scheme may be right that awareness of the FSCS boosts consumer confidence and “helps good advisers” – but I doubt it. (‘FSCS: We help boost adviser business’, Feb 18).

I suggest it makes many consumers careless. What due diligence did consumers do on the advisers who transferred them out of the final salary scheme ofBritish Steel? 

Yes, I’m sure, as she says, FSCS chairman Marshall Bailey would welcome a review of the FSCS.

That would have no benefit unless the Financial Conduct Authority gets serious sanctions for failure to even see problems put in front of it, let alone take effective action against wrong doing.

Lewis Jarrett

 

Pensions are no cash cow

Over the past month we have had all the regular pre-Budget scare stories about removing or reducing tax relief on pensions, supposedly because the chancellor needs money to fund Boris Johnson’s spending plans.

Many commentators even refer to higher-rate tax relief on pensions as a ‘top-up’, as if the government is giving savers a bonus like it does on a Lifetime Isa. 

Nothing could be further from the truth. No such top-up is made, and your tax is merely deferred. 

If you carefully manage your income to pay a lower rate in retirement, that is merely the ‘reward’ for risking your life savings on the stock market and the whim of a future chancellor.

Simplification is in order, however, and I suggest scrapping the lifetime allowance on defined contribution schemes, which is essentially a penalty for prudent saving and good investment returns. 

The more people can save into a pension, the more tax they will pay when they drawdown their retirement income.

Government policy needs to be driven by the long-term aim of allowing and encouraging people to save for a reasonable level of retirement income. 

The state pension is unaffordable in its current form and any tax changes that act as a disincentive to save into a pension and therefore increase that burden must be avoided. 

The chancellor must not use pensions as a short-term cash cow to help him balance the books.

Edward Bowden

 

DB transfers

Regarding your article on page two of Financial Adviser  dated February 13, ‘MPs to meet regulators over PI issues’.

This has to be a waste of time. The horse has already bolted. 

Thoughts about professional indemnity cover and the FCA’s involvement in the advice process and monitoring of defined benefit transfers should have happened the day after George Osborne announced pension freedoms in the Budget, nearly six years ago. 

According to the article, Nick Smith, Labour MP, said, “reform to PI is the answer”. 

PI providers are backing away from DB transfers, so how can that be the answer?