Labour MP Pat Glass has questioned whether the Government could be on the hook for future misselling claims arising from the Budget pension freedoms.
Speaking at the Taxation of Pensions Bill public committee hearings yesterday, Glass said consumers who had not been properly directed to financial advice could seek redress from the Treasury if they purchase inappropriate products.
The MP for North East Durham said there was no redress option for non-advised sales, so the Government could leave itself open to claims for inappropriate product choices.
She called for the Treasury to introduce a “second line of defence” to better protect consumers from making poor choices.
Glass said: “Do you intended to introduce compensation for those who have taken unsuitable products, particularly for those who have not been told by the product seller that they need to seek independent financial advice?”
Treasury financial secretary David Gauke said: “It is not possible to give a simple answer as it depends on the nature of the relationship between provider and consumer.
“What is important for the Government is to ensure easy access to the guidance guarantee, that consumers are made aware of the consequences of decisions through guidance or through regulated firms complying with regulatory obligations, and that consumers go into any arrangement with their eyes open.”
Asked whether the reforms leave the Government open to future compensation claims, Gauke said: “What we are determined to do is give consumers every opportunity to access guidance and clear information to be aware of when it is in their interests to seek financial advice. We believe that is the correct approach to ensuring consumers are protected and taxpayers in future are protected.”