The Association of British Insurers is calling on the Government to scrap the requirement for savers with a guaranteed annuity rate to take advice.
In a letter to Chancellor George Osborne and FCA chief executive Martin Wheatley, the ABI says the Pension Wise guidance service should be extended to give guidance to those with GARs.
It proposes a “customer control” mechanism that “must allow providers to carry out customer wishes without fear of future redress actions or restrospective regulatory action where the correct steps have been followed”.
The Government has mandated that savers with safeguarded benefits worth more than £30,000 must get regulated advice before taking their pot as cash.
But over the past week national newspapers have slammed pension providers for blocking savers from accessing the pension freedoms, with “expensive” advice costing up to £1,000 listed as one of the barriers.
This week Money Marketing also reported that providers are interpreting the rules around advice in different ways.
The letter also calls on the regulator to specify the products and circumstances where advice should be taken.
It says: “The FCA has in the past hinted that advice should be taken in regard to some products – in particular, drawdown and UFPLS payments”.
The ABI says it wants clarity by 21 July.
In addition, the regulator wants the Treasury to publish detailed information on Pension Wise and restart its marketing campaign.
It also warns against language describing pensions as a bank account and “presenting advice as an unnecessary barrier”.
Royal London backs the trade body in a letter to pensions minister Ros Altmann.
Royal London pensions specialist Fiona Tait says: “When establishing the rules the Government sought to protect customers with guarantees in their pension. But it failed to anticipate the extent of pent-up customer demand to access their ‘own money’. This is creating genuine problems for customers which pension providers cannot address under current rules.
“Pension Wise was set up specifically to provide guidance for everyone eligible for the pension freedoms. It is only right that Pension Wise should be the first port of call for customers, including those with guaranteed annuities. Providers should be able to accept customer requests for pensions encashment if they can prove they have been through the Pension Wise process and understand the implications of giving up guarantees.”
Tait adds that regulated advisers should continue to have an “important” role to play, but largely for those with more complex needs or for defined benefit to defined contribution transfers.