The funding of the new pensions guidance body should not fall solely on FCA-regulated firms, Apfa has urged the Government.
The Treasury’s consultation on public financial guidance closes today.
Launched after the March Budget, the consultation outlined plans to close the Money Advice Service with its pension guidance remit going to a new provider as well as setting up a second body with responsibility for money guidance.
In its consultation response, Apfa says funding for the new pensions guidance body must not solely fall on FCA-regulated entities, adding the organisations that previously funded the bodies should continue to contribute.
Apfa’s response says: “Those pension providers that contribute to the Pensions Advisory Service but are not regulated by the FCA should continue to contribute, via the Department for Work and Pensions, to the support the new body.”
Apfa says the new pensions guidance body should “act as a stepping stone” to consumers getting the right advice, including finding a regulated financial adviser and introducing consumers to advice firms.
It explains: “This should include explaining the benefits of financial advice and helping a consumer find a suitable financial adviser in their area.”
Apfa also suggests the MAS adviser directory service be taken over by the new body and that consumers should be referred to it.
The consultation response adds “It should also be highlighted that the initial conversation with an adviser is always free as the first meeting is the opportunity to discuss and, if the service is wanted, agree the fee arrangement going forward.”
Drawdown comparison tool
In its response, Citizens Advice also called for the adviser directory to be improved.
Its consultation response says: “The new body should support a more responsive tool with clearer pricing information and feedback from other consumers to boost confidence.”
Citizens Advice also wants a drawdown comparison tool to be introduced to help consumers following the introduction of pension freedoms.
It says: “The current lack of a reliable comparison tool makes it hard for consumers to shop around. Many consumers simply don’t have the energy or know how to compare prices through individual providers. This may increase consumer risk of falling prey to scams through other websites.”
It suggests introducing an overall comparison tool to supplement the verbal information consumers receive.
“We believe a tool, which uses a range of standardised indicative variables, such as annuity rates and marginal tax rates, along with information presented in a comparison-site style will enable clients to better understand the implications of different options and therefore make a more informed choice as to which options are best for them.”
Apfa also wants Government assurance there will be cost savings in running the new pensions guidance body.
Director general Chris Hannant says: “Part of the Government’s rationale was to make cost savings and we would like assurances that the new set-up will lead to future reductions in the cost of public financial guidance. The funding model for the new pension body must be fair with contributions from all those that are likely to benefit – this should include those that are not regulated by the FCA.”