Advisers fear the cost of funding the Government’s flagship guidance service will be an “open cheque book” after the Treasury announced it will recoup extra costs from the industry if the bill exceeds its £35m estimate.
In an update published this week, the Treasury said the guidance service, which is to be called Pension Wise, will cost £35m in 2015/16.
Under current proposals, advisers are set to pay 12 per cent of the running costs, equating to £4.2m.
Set up costs for the service were covered by a Treasury loan. Original plans had the advice sector paying 30 per cent of costs, the largest proportion of any industry, before the FCA backtracked.
If the bill for guidance exceeds the estimate, the Government will cover the excess and recoup the difference from the following year’s levy, it says.
Jacksons Wealth Management managing director Pete Matthew says: “My biggest concern is the open cheque book nature of the levy. I do not have a massive amount of confidence this will deliver value for money, given those delivering the guidance will not have pensions qualifications.”
Aurora Financial Planning chartered financial planner Aj Somal says: “As business owners we need more certainty on what the levy will be each year.”