Regulators should revisit why they have not included full advice in the remit of the guidance guarantee, Fidelity Worldwide Investments retirement director Alan Higham has suggested.
Higham says the guidance guarantee service is at risk of failing savers by not providing full advice with recommendations. Current plans will see the likes of The Pensions Advisory Service and the Money Advice Service simply explain retirement options and direct savers on to regulated advice.
Higham says: “The guidance guarantee will do 80 per cent of the work, but not give advice. It’s a bit like taking your car to the garage, being shown how to fix the car, but not actually getting it fixed for you – what people really need is to be told what to do.
“Steve Webb said full advice was too expensive but that doesn’t seem to me to stack up to scrutiny. People will pay upwards of £600 in sales commission when they turn their savings into an income, roughly the same amount as advice costs.
“I could – and I’m sure TPAS could – build a retirement advice system with that kind of money with no need for an industry levy.”
TPAS chief executive Michelle Cracknell wouldn’t be drawn into whether TPAS’s role could be extended.
“I hope the guidance will naturally evolve to meet peoples’ needs – the people accessing their pots in 2015 will be different to those accessing their pots in 2020”, she says.
“I don’t think people will feel short changed because at the moment they are getting nothing.”
Cracknell says the key to boosting the number of people who take up advice is ensuring savers are correctly filtered by the guidance service and directed to the most appropriate adviser for them.
She adds: “We have started engaging with the adviser community to understand the bridge between guidance and regulated advice. If we improve the signposting, more people will access advice.”
Personal Finance Society chief executive Keith Richards says Higham’s suggestion would be “crossing a line”.
“We have to be very careful in trying to provide solutions to problems that don’t yet exist. We would have concerns if the guidance guarantee was extending into recommending solutions,” he says.
Prior to the Budget, the PFS suggested introducing a voucher system, paid for by regulatory fines rather than an industry levy, that would have produced a report on savers’ retirement income options.