Pension providers have received few if any requests from advisers hoping to take advantage of the new pensions advice allowance rule, throwing the tenability of the measure into further doubt, FTAdviser can reveal.
The rule, which came into force last week, allows pension scheme members to withdraw £500 a year tax free, up to three times in their life, to pay for financial advice.
First flagged in August last year, the measure is intended to make financial advice more accessible to more people, in a move to close the gap that was opened up by the Retail Distribution Review (RDR) reforms.
But none of the pension providers FTAdviser contacted reported more than a handful of inquiries about taking advantage of the measure, even though the details of the measure were finalised more than two months ago.
FTAdviser asked the government whether it was concerned by the apparent lack of demand for the new advice allowance.
A spokesperson for HM Treasury said the onus was on the industry to market the allowance.
"We would expect providers and independent financial advisers to make people aware of the allowance and its potential benefits," the spokesperson said.
Pensions giant Aviva said it had not received a single inquiry from someone looking to use the advice allowance.
A spokesperson for the life company said: "Although it’s still early days, Aviva hasn’t yet received any demand from advisers for this, either on company schemes or individual pensions."
Legal & General, also one of the biggest providers, reported it had received no more than "half a dozen" inquiries.
A spokesperson for Royal London, meanwhile, said the firm had received only a "handful" of inquiries, but added it was still "early days" .
Prudential likewise revealed it had only received "a few" inquiries, but was also eager to stress that the rules had only "recently been finalised".
Vince Smith-Hughes, retirement expert at Prudential, said: "Prudential supports the Pensions Advice Allowance but it is important to recognise that there are complicated processes which need to be in place to deal with the payment and recording of these payments.
"In many cases facilitating ordinary adviser fees from a product will often achieve the same outcome."
A spokesperson for Aegon said so far the firm had not seen any demand for the advice allowance, while a Scottish Widows spokesperson said the firm had received "very few" inquiries.
Low demand is the latest of a number of stumbling blocks impeding the success of HM Treasury's policy.
One such stumbling block is that the majority of providers simply cannot provide the service for all of their members. As FTAdviser reported in February, many pension policies sold before RDR went live in 2012 do not allow for customer-agreed remuneration.
Another, according to financial advisers, is that £500 is not enough to pay for comprehensive, meaningful financial advice.
Darren O'Brien, a London-based financial adviser with Aurora Financial Solutions, said as yet he had seen no demand at all for the new advice allowance from clients.
This, he said, was in part a result of the government's failure to adequately publicise the measure.
"The government introduces things lilke this, but then leaves it to the industry to market them. It would be nice to see the government give it some publicity," he said.
But even if the demand were there, Mr O'Brien said he would remain sceptical, pointing out that a large number of life companies were unable or unwilling to offer the service.
He also said that, while £500 may be enough for an hour with an adviser and a few hours of administration, it was not enough for report-writing and recommendations.
james.fernyhough@ft.com
