The body that represents the interests of consumers accessing financial services has called for qualified financial advisers to staff the Government’s Pension Wise guidance service. Pension Wise was set up to provide guidance to those aged 55 or over on their options for accessing their pension savings.
Giving evidence to a Work & Pensions Select Committee inquiry, the Financial Services Consumer Panel (FSCP) said it was concerned by the fact that only around 25% of those contacting their provider about accessing their funds had contacted Pension Wise first. On this subject, the Panel’s letter to inquiry chairman Frank Field MP says:
“The Panel believes [fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][the Government] should regularly publish management information to show what proportion of eligible people is making use of the service. It also needs to conduct a thorough review to determine whether Pension Wise is leading to better outcomes for consumers.”
It also expressed concern about the qualifications and experience of Pension Wise staff, observing that those employed by The Pensions Advisory Service (TPAS), which provides the telephone guidance under Pension Wise, require much more experience than those conducting face-to-face guidance sessions for Citizens Advice (CitA). Even for those that use TPAS, the guidance falls short of the service a regulated financial adviser can offer, for example a TPAS or CitA employee cannot recommend a specific course of action to an individual customer.
The FSCP has gone further, and suggested that only qualified financial advisers (with an appropriate QCF Level 4 Diploma) should be allowed to offer guidance. It says:
“We believe that the level of service required by consumers in this area can only be delivered by confident, competent, experienced professionals who do not have to rely on a script. They need to be as qualified and experienced as regulated financial advisers.”
Consumers wishing to switch out of a defined benefit (final salary) scheme to a defined contribution (money purchase) scheme, in order to take advantage of the recently introduced pension freedoms, must consult a regulated adviser. The FSCP agrees with this requirement, but believes that a two-tier system has been created, as those who are not members of defined benefit schemes are not required to take advice. On this issue, it comments:
“It does not seem logical to protect certain groups and not others from taking decisions that are not likely to be in their best interests. The approach to mandatory advice has not been consistent.”
However, the Panel does not appear to indicate how it believes its goal of having guidance delivered by qualified advisers could be achieved.
The Panel has also recommended that consumers are provided with easy access to a retirement income calculation tool; that the Financial Conduct Authority actively monitors whether providers are signposting customers to Pension Wise; and that a system is established to provide effective advice to consumers wishing to sell their annuities, when this becomes an option in the near future.
Aegon has recently announced that its customers cannot make partial withdrawals from their pension funds unless they have obtained financial advice first.
The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article.