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Could TPAS offer advice to support guidance guarantee?

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.


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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Money Guidance CIC 10th September 2014 at 10:14 am

    Whether it`s Platforum`s 11 million or Garry Heath`s 15 million number of post-RDR orphans, it`s inevitable that TPAS will have an increasingly high profile role in the future – both as communicators and eventually as potential introducers to suitably qualified advisers.

    P.S. Separated at birth…. Alan Higham and Steve Huison of Full Monty fame?

  2. “I don’t think people will feel short changed because at the moment they are getting nothing.” Cobblers. Guidance without either charge or obligation is readily available to those who are prepared to make the effort to seek out an authorised adviser, the great majority of whom (anecdotally at least) don’t charge for their first meeting with prospective new clients. That first meeting will, in most cases, encompass general guidance without us having to pay yet more levies for some other body to do it.

  3. The whole Guidence thing is going to be a hugely expensive waste of time. I watched a video yesterday of M Wheatley na dGriffith-Jones giving evidence to the TSC. When asked about the guidance Wheatleys reply was awesome…. The guidance will simply provide people with info and options and where necessary point them tho regulated advice”. That was it. If this is the case why don’t they just leave this in the capable hands of the customer services departments of existing providers with a very simple remit. “Give your customers the information they need and point them to an independent website for getting regulated advice. It doesn’t get any easier than that. No need to increase budgets of MAS et al to provide an extremely simple service. It should be made extremely hard for anyone to just take their benefits from the existing provider without advice and very easy to do after advice has been taken if the end result of the initial chat chats with the provider pointed this out. All these conversations to be recorded and kept and a large sample scrutinised by FCA on a quarterly basis. If there is any wrong doing/pressure to take providers solution/straying into advice then the provider is suitably reprimanded. It does not take tens of millions a year of levies to fund what can be a simple solution.

  4. Well according to Martin Wheatley yesterday at the TSC interview

    Guidance will consist of basic advice of take some money out and put it in an ISA or (get this !!) go speak to an IFA

    Glad that’s sorted then !! bloke down the pub could have told any-one that

  5. @Marty I agree entirely. The FCA Consultation paper has set out the standards for guidance delivery. pension product providers could issue this pack to consumers with the very clear warning that not shopping around will damage their wealth.

    Consumers can then choose whether to engage with an adviser or DIY it.

    This is turning into a complete nightmare. I think we need to impose the “Mum test”

    Would you recommend to your Mum that she takes advice from MAS?

    I really don’t think so!

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