Guidance bodies have expressed concerns that the pensions advice allowance will lead to more people opting for advice even when they only require guidance, Money Marketing understands.
One senior source says in meetings with the Treasury over the pensions advice allowance, guidance providers had given some “push back” over fears guidance could be neglected by people who would be better served by free information rather than taking money out of their pension to pay for regulated advice.
The source says: “There was definitely a divide between public guidance bodies and commercial providers who work through intermediaries.
“They [the guidance bodies] don’t want people thinking they should be seeking advice when they could be doing just as well with guidance.
“I thought we shouldn’t be sitting here demonising advice; if they want it let them do so.”
The source adds some of the comments were at odds with how guidance bodies had backed advisers in public.
Another senior source says the push back could be guidance bodies “sweating that someone is going to steal their lunch.”
The best of both worlds
The pensions advice allowance will be introduced in April. Consumers can access £1,500 early from their pension pot in three £500 tranches, providing the money is used towards regulated financial advice and not taken in the same tax year.
The Pensions Advisory Service chief executive Michelle Cracknell says: “We really think advice and guidance fit really well together. Guidance gets people started, and a lot of the recommendations we make after they have had guidance are that they may want to seek advice. But we can do that after finding out about the issues they are facing.
“Guidance is the foundation level, and we are hopeful people will be encouraged to go there first.
“People don’t naturally think they need regulated advice. Some people can make a decision having had just guidance, other people should have advice.”
Money Advice Service chief executive Caroline Rookes says: “We welcome the pension advice allowance which gives people another way to access the advice they need to make a decision about their pension which will last for the full length of their retirement.
“Our main goal is to create an effective partnership with those providing regulated advice to ensure people are able to make informed decisions about their money. This is particularly true for people who are considering their pension options. The journey from guidance to regulated advice is an important one.
“Guidance should provide the information that people need so they can make informed decisions about their money before they are directed to regulated advice for a personalised recommendation. We’ve seen this work well through our retirement adviser directory which helps people to find regulated pensions advice in their area.”