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Govt under pressure to slash pension guidance costs in radical restructure


The Government is under pressure to radically scale back the financial guidance services it offers to the public to slash costs and simplify the system for consumers.

The Treasury is currently consulting on how public financial guidance should be structured and funded. The consultation is running alongside the Financial Advice Market review.

In its response, Apfa calls for the Money Advice Service, The Pensions Advisory Service and Pension Wise to be merged.

It says Pension Wise is currently providing poor value for money, and points to figures recently published by the Government which show each guidance appointment costs almost £500.

Apfa director general Chris Hannant says: “There is a growing confusion around financial guidance that needs addressing. We believe that the organisations providing public financial guidance should be merged and the resulting entity needs to work better with other providers of information, guidance and advice in educating consumers regarding the options available to them.’

“At the moment, the public financial guidance provision is fragmented and low public awareness could in part be caused by the existence of multiple entities and confusion around what they all do’.

“Public financial guidance should have a triage approach, channelling consumers towards the level of guidance or advice that they need and can afford. It should also ensure that it delivers good value for money by not duplicating services.”



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There are 7 comments at the moment, we would love to hear your opinion too.

  1. A merger sounds like common sense, as does attempting to create a better understanding between guidance and advice

  2. I’m glad they made a mess of this after all their schemes to cut regulated advisers out of the picture. Cretins.

  3. “under pressure” from who?

  4. Merging is not the answer. Scrapping pensionwise and MAS would be a far better solution. The Govt could have saved a fortune if they had simply issued a voucher to everyone who wanted to get advice around their pension freedoms. These could have been taken to an adviser (who was willing to deal with them) who would have spent the time dealing with the customer and could have then redeemed it for payment by Govt. Professional, regulated advice (and all the protection that goes with it) tailored to the person’s circumstances paid for by the Govt. It could not have been easier, the end user better off with more protection and delivered at a reasonable cost to the Govt.
    Still its only more money wasted on a useless projects that due to the incompetence of those in charge is never going see any real tangible benefits to anyone other than those in receipt of salaries and BiK.

  5. A voucher system would also, in theory at least, be a lot less expensive to administer than the costs of all these guidance agencies. The likely problem is that, in the hands of a government department, its administration would probably be so clunky, slow and inefficient that financial advisers would, after the first few cases, refuse to have anything further to do with the scheme and start turning people away.

    Better to put the boot on the consumer’s foot ~ after all, it’s they who need the advice/guidance, not we who are desperate to give it ~ and require them to pay the £100 upfront to the adviser. At the end of the session, the adviser would give the customer a certificate confirming it had taken place and it then would be up to him, the consumer, to redeem it.

    Whilst encouraging consumers to seek out and take advice is a good thing, the government needs to stop molly-coddling them and stop treating advisers as an inexhaustible source of money to fund every new initiative designed to promote consumer engagement. Adviser businesses are commercial enterprises with far from modest overheads, not charitably funded public service institutions of which consumers can freely avail themselves without having to pay anything for the privilege of so doing.

    With that in mind, perhaps the vouchers for these initial guidance/advice sessions should cover no more than half their cost.

    And, for the umpteenth time, why doesn’t the FCA mandate OM as the default option for all pension funds? No one has condemned this as a bad idea yet, true to form, the FCA has remained stonily silent. Does APFA have a view on it?

  6. For a voucher system to work it will have to be extremely closely policed. There will have to be a stated outcome for the cost of the voucher. I can see the one hour’s initial meeting at the advisers cost suddenly costing the face value of the voucher. Won’t work.

  7. I can’t see a voucher system working either. A combination of reasons would make it untenable in the real world. The comments above have touched on a few, such as advisers refusing to accept the vouchers and a difficulty in policing what clients are actually getting for the voucher.

    For the money that is spent on PensionWise and MAS surely someone could come up with a public engagement strategy that informed the public of the generic ‘at retirement’ options as well as the difference between advice and guidance. On top of this, as Julian Stevens rightly states, OMO could be made mandatory.

    As usual those with the knowledge wont be consulted.

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