HM TreasuryDec 19 2016

Advisers told they must continue to pay for guidance body

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Advisers told they must continue to pay for guidance body

The government's new single financial guidance body will continue to be funded by a levy on the financial services industry, HM Treasury has said.

It has published a consultation into the new body - which does not yet have a name but will replace the Money Advice Service, Pension Wise and The Pensions Advisory Service in autumn 2018.

HM Treasury stated it intends to continue to levy the financial services and pensions industry to fund the new body, as it currently does for Mas and Pensions Wise.

Tpas is funded by a grant from the Department for Work & Pensions, which is recovered from the general levy on pensions schemes.

HM Treasury stated: "A levy funded model remains appropriate given the benefits which firms will gain over time from effective debt advice, money and penisons guidance and financial capability interventions.

"Effective financial capability programmes should give consumers the knowledge and confidence to make sound financial decisions and engage more responsibly with the financial services and pensions sector, leading to reductions in debt write-offs, increased demand for products and reduced costs of regulation.

"The government's expectation is that the amounts charged to the levies to deliver information and guidance will remain in line with the amounts charged before the new arrangements take effect.

"However, as the efficiencies generated from merging the three current services into a single financial guidance body begin to materialise it may be possible to reduce the overall cost over time."

Some had lobbied HM Treasury to widen the funding base of the service by expanding the debt advice levy to other creditors such as utility companies but it said there were no plans to do this at this time however it will be kept under review.

The new guidance body will be responsible for five broad areas: debt advice for those in debt problems, guidance and information on matters relating to occupational or personal pensions, providing information to help consumers avoid financial fraud and scams, guidance on wider money matters, and co-ordination of non-governmental financial education programmes for children and young people.

Economic secretary to the Treasury Simon Kirby said: “We want to help people take charge of their finances, and make the financial decisions that are right for them.

"This new body will ensure that help is readily available for people who need to access debt advice, information on their pensions or guidance on other money matters.”

Until the body comes into existence Mas, Tpas and Pension Wise will continue to operate as normal.

Rona Train, partner at Hymans Robertson, said it makes sense to have one source of financial guidance.

She said: "This will give individuals more clarity on where they need to go to get support. While this is a step in the right direction, we need to remember that these generic advice services are rarely going to give people the levels of support they need in the face of so much more complexity post pension freedoms. 

“People need access to better tools to help them understand their own personal circumstances. Technology has a big role to play here. The Government’s ambition for a pensions dashboard would help, but there are valid concerns over whether this will be ready by its deadline."

damian.fantato@ft.com