The Government’s pension guidance guarantee could put people off paying for financial advice, according to Work and Pensions select committee chair Dame Anne Begg.
In his Budget speech, Chancellor George Osborne announced savers would be able to take their entire pension pot as cash at age 55 and people would be entitled to “free, impartial, face-to-face advice”.
However, in the documents published alongside the Budget this commitment was downgraded to “guidance”.
Speaking to Money Marketing, Begg says the failure of politicians to differentiate between guidance and regulated advice could make it less likely people will pay for advice.
She says: “Language is important in both setting a tone and making sure meanings are clear. It is worrying, especially in the financial sector where a lot of work has been done to make sure that advice is properly regulated, transparent and people know what they are being charged.
“To then confuse that with something that is well short of advice is irresponsible. People will have an expectation about what they are going to get and it turns out that is not what they are getting at all.
“There will be more demand for ‘advice’, but will people be willing to pay for it if they think they have been promised something for free from Government?”
In April, Osborne told the Treasury select committee that he used the word “advice” because he had “to communicate in English so people watching knew what he meant”.
However, the following month the select committee’s report on the Budget said Osborne’s speech “could have been better phrased”.