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Govt urged to address small pot advice problem

Cross party politicians and the influential industry leaders have signed a joint letter calling on the Government and the FSA to address the risk a post-RDR advice gap could pose for people with small pension pots.

The open letter, drafted by ILC-UK chief executive Baroness Sally Greengross (pictured) and sent to Mark Hoban, Steve Webb and Lord Adair Turner, calls on ministers and the regulator to convene an urgent ‘retirement incomes summit’ to address the issue.

The letter has been signed by 16 people including Lord John McFall, Frank Field MP, NAPF chief executive Joanne Segars, Aifa policy director Chris Hannant and Money Marketing editor Paul McMillan.

Greengross says: “The status quo in financial advice is not sustainable. Trust in financial advice is paramount and this will only improve with a more transparent charging structure and stronger rules to ensure the independence of advice.

“But the unintended consequences of the RDR could reduce access to advice for people with small pension pots. We need to place a greater emphasis on the quantity of advice as well as the quality of advice.”

ILC-UK has produced a white paper outlining possible solutions to the problem. These include a call for clarity on the distinction between the provision of information and advice, restoring a concern over the quantity of financial advice to the RDR process and publishing open market option take-up by wealth cohort in order to improve transparency.

Partnership has supported the ILC in producing the white paper.

Partnership chief executive Steve Groves says: “The key changes brought by the RDR are to be welcomed.

“A transparent, professional advice market is in everyone’s interest. However they risk creating an ‘advice apartheid’ unless there is greater clarity on what is information rather than advice and the processes to access financial products are simplified.”

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Comments

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

  1. It is a bit late now. Concerns have been raised since FSA decided against the advice of IFA,s etc that RDR would cause a great many Mr/Mrs average from getting advice.

  2. Wakey Wakey !!!!

    Been asleep have we ??

  3. Why, when something is so obvious, always clear that RDR would do this, has no-one tackled it before. I feel very sorry for the majority of older people with small pension pots who will almost certainly not be able to afford any advice…….we all know what happens when the banks get involved on the advice platform don’t we……..target driven decisions made on behalf of the bank not the client!! Goodness, this process is like watching paint dry and then deciding you don’t like the colour!

  4. It seems that finally someone, somewhere, has found the light switch but as annon @9.49 points out the whole professional world has been telling the FSA Mr & Mrs Average will suffer huge detriment by a reem of unintended consequences of RDR. They wont be able to provide sufficient remuneration to IFA’s to make it commercially viable for us to bo business with them and on the ther Hand the FCA are saying they have stop the public from making irrational choices. How do they intend to do that if the Averages of this country cant afford to pay us a reasonable income level for well qualified, professional advisers to give them advice. Well Done Hector – You really are a star!!!!

  5. What we really need at the present time to take our minds off Europe and financial meltdown is an all trumpets blaring bandwagon. Never let is be said that Baroness Sally let gross grow under her feet.
    I see that the signatures to her letter are the “usual culprits”. Most of these culprits are at policy rather than practical level, which perhaps accounts for the “transparent, professional advice” remark, which is about a relevant to solving the Small Pots problem as polishing a car is to keeping it running properly. It might make it look nice, and that is all.
    Small Pots are fundamentally uneconomic for anyone. Therefore any solution must be artificial and very specific in its coverage. Following any existing rules demonstrates a lack of clarity and imagination that is alarming. In many ways it is starting to sound like one of those band-wagons that end up being an excuse for a “job-for-the-boys” solution.
    Hint: forget sophistication, think brutal simplicity.

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