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Govt and FSA dismiss RDR small pot concerns

The Government and the FSA have dismissed concerns about the impact the retail distribution review will have on people with small pension pots.

Earlier this month, cross-party politicians and industry leaders signed a joint letter from the International Longevity Centre calling on ministers and the regulator to address the risk a post-RDR advice gap could pose for people with small pension pots.

A joint response to the letter from the Treasury, the DWP and the FSA suggests reforms to the open market option, plans to consolidate small pension pots, the establishment of the Money Advice Service and the introduction of adviser charging will address the ILC’s key concerns.

The letter has been signed by Treasury financial secretary Mark Hoban (pictured), pensions minister Steve Webb and FSA chairman Adair Turner.

It says: “You suggest that the Government should convene a ‘retirement incomes summit’ to address a number of issues.

“We believe that a number of measures are already in hand that address many of these points.

“Firstly, in March 2011 the Government asked the open market option review group to identify and agree feasible options for a ’default Omo’. Through this group, the Government and FSA have been working with a wide range of Government, industry and consumer organisations.

“As a result of these meetings and discussions with their members, the Association of British Insurers has announced a new code of practice for its members.

“While the Government is looking at ways to help consumers consolidate their savings so that they have the biggest possible ‘pot’ to shop around with at retirement, it is clear that there will remain a significant number of people for whom it is uneconomic to seek financial advice.

“To help these people assess their needs, the Government has set up the Money Advice Service to offer free, impartial information and advice on all money matters, which may include whether it is appropriate to seek professional advice.

“Tackling the enduring myth that advice is free is a key part of the RDR, and increased transparency around commission and costs will help consumers trust the sector to help them make informed decisions about their finances.

“The introduction of adviser charging will empower consumers to decide the level of service that best meets their budget and needs.”

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Comments

There are 8 comments at the moment, we would love to hear your opinion too.

  1. Here we go again no one takes notice of the people who know about these things.The FSA and Ministers dont have to worry about small pots theirs are v large. No IFA will help those wth small pots as it will not be profitable for them to advise for next to nothing as those with small pots are the least likeey to pay a fee etc

  2. “To help these people assess their needs, the Government has set up the Money Advice Service to offer free, impartial information and ADVICE on all money matters, which may include whether it is appropriate to seek professional advice

    So MAS is giving Advise! so why do they keep denying it with the alegedly corrupt A4E employing none qualified Advisors on £20,000 plus to work for MAS and call it free?? you couldnt make this stuff up. WE JUST GET LANDED WITH THE COST.
    THE AIM IS TO GET RID OF IFA’s How many times do we need to say it?
    The Conservative Liberal Government as just as bad as Labour were.

  3. lets be honest the govertment and the FSA really do not care about anyone but themselfs. Post RDR you have to charge a client a fee. The comm that used to be paid is added to pension pot. Over a number of years I have given this option to clients but when you work the numbers it takes almost 20yrs for the client to breakeven ( and thats if they live that long. The forms and documents that clients need to fill on there own ( lifetime allowance etc ) are a joke

  4. Errr! “it is clear that there will remain a significant number of people for whom it is uneconomic to seek financial advice.”

    Wasn’t the whole point of RDR to see better consumer outcomes

    RDR – Nil Points
    FSA – Nil Points

    These people really are out of touch with any form of reality.

    The word I am looking for would not be permitted to be printed on these blogs, but those of a northern extraction will surely understand that to throw something away makes you a ………………..

    Between them they have effectively sidelined thousands of less well off consumers to not being able to afford economically priced IFA services.

  5. Justin Credible 19th March 2012 at 12:01 pm

    Of course they dismissed concerns, none of these inept clowns has a small pension pot. They have never seen one, don’t know anyone with small pension pots and certainly have never tried to gather them together for anyone. They are so detached from reality it is beyond belief. They are as qualified to pronounce judgement on this (and many other pension matters) as I am to fly a jumbo jet. Idiots!

  6. Dear regulators, you have made a mistake but you cannot admit it, the end result is more consumer detriment than you intend to resolve.

  7. Hoban, Webb, & Turner

    The 3 (not) so wise monkey’s

    When will they learn its not the gun that kills it’s the fool who pulls the trigger.

  8. “Tackling the enduring MYTH THAT ADVICE IS FREE is a key part of the RDR, and increased transparency around commission and costs will help consumers trust the sector to help them make informed decisions about their finances.”
    “…Government has set up the Money Advice Service to offer FREE, impartial information and advice on all money matters”

    Do these people ever listen to themselves?

    And what about, “increased transparency around commission”. What commission?

    This Hoban/Webb/Turner statement has been crafted (if that’s the right word) by someone who has read about RDR somewhere (probably the Daily Mail), doesn’t comprehend what it’s about, cannot envisage the consequences and has been fed enough platitudes, sound bites and cliches to put this garbage together. I wonder if Hoban/Webb/Turner have actually read it, let alone signed it? When they do, I hope that they are suitably embarrassed.

    Roll on retirement!

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