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Adviser value for money under the spotlight in MPs’ pensions inquiry

The work and pensions select committee will examine if pension customers get value for money from advisers, in a new inquiry launched today.

The inquiry is seeking to find out the transparency of the pensions industry when it comes to charges, investment strategy and performance.

The inquiry will look at whether enough is being done by the industry to make sure savers:

  • Get value for money for their pension savings;
  • Understand what they are being charged and why;
  • Understand the short- and long-term impact of costs on retirement outcomes;
  • Can see how their money is being invested and how their investments are performing;
  • Are engaged enough to use information about costs and investments to make informed choices about their pension savings; and
  • Get good-value, impartial service from financial advisers.

The background notes to the inquiry cite research from the FCA last year that showed only 47 per cent of defined benefit transfer advice met its suitability standards.

The inquiry says: “The FCA recently told us it has 33 open investigations into financial advisers suspected of having misadvised pension transfer clients, and have additionally banned four financial advisers.”

Keith Richards: Contingent charging must be preserved 

The FCA will be expected to report back on whether the use of contingent charging by advisers gives rise to an “inherent conflict of interest”.

Submissions on eight questions will be open until 3 September, with findings to be followed by an FCA policy statement on pension transfers in Autumn.

The inquiry follows the government’s earlier review into the pension freedoms and choice reforms.

Inquiry questions

1. Do higher-cost providers deliver higher performance, or simply eat into clients’ savings?

2. Is the Government doing enough to ensure that workplace pension savers get value for money?

3. What is the relative importance of empowering consumers or regulating providers?

4. How can savers be encouraged to engage with their savings?

5. How important is investment transparency to savers?

6. If customers are unhappy with their providers’ costs and investment performance/strategy, are there barriers to them going elsewhere?

7. Are Independent Governance Committees effective in driving value for money?

8. Do pension customers get value for money from financial advisers?

Source: Work and Pensions Committee

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. So, one very vague question out of eight relating to advisers. I think we all know the answer – it depends on the adviser. Some do, some don’t.

  2. MPs and value for money in the same sentence, that’s a first!

  3. laughable
    MPs investigating whether financial advisers are good,value for money.
    630 of them are definitely not good value for money.
    why dont they put their own house in order before the come out with these outrageous allegations!!!!!

  4. im speechless members of parliament
    are definitely of no value in this country how dare they criticise sometbing they know nothing about.

  5. So I assume the Actuarial profession and Insuers are being included in this review, given that it is them that determine the values that most advisers have to work with. Advisers charges are just a minute part of the fees that are deducted from the pension fund. The only differentiation between Advisers, Insurers and the Actuaries is that we are easy targets.
    Why is it that in every review of pensions since the year dot, the actuarial profession have never ever been brought to task ???

  6. Question 9 Why is it easier for someone to borrow or gamble £20,000 than it is to invest the same amount?

  7. Bring it on …..

    If this inquiry is done properly, if will / should throw up some home truths ?

    I believe, we all know advice and recommendation is overly expensive, irrespective of if its a pension or any other vehicle ! and if value is only measured in pound notes, then of course it will be worthless.

    The one question missed of the list is -:

    Why does the regulator command a salary bill that equates to over £101,000 per head ?

    My fear is, it will just be used as another big stick to beat up an industry, who consistently gets ignored, and has no rights to defend its self….. will it be a fair trial ? or just another witch hunt ?
    I know where my money lies

  8. Anybody wish to point the finger at the regulator who created a system where the consumer pays all. Commission could easily have been controlled by providers. The RDR did not work for consumers!

  9. We charge what we need to, unlike the fleas on our backs!

    The client pays or doesn’t and if they d.i.y they save a few percentage points which is fine, although recent history tells us that some people may not know what they are actually looking for (unregulated debacle) and those that do are probably diy-ing anyway!

    As I said last week, MP’s are busy shuffling paper and making a noise but it will yield NOTHING of value for the wider public!

  10. Can I suggest an additional question…

    9. Have regulatory changes over the last five years improved outcomes and provided value for money for consumers?

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