Adviser and consumer groups have lobbied the Government not to hand providers a role in delivering Chancellor George Osborne’s Budget guidance guarantee.
As part of a radical liberalisation of pension rules announced in March, Osborne promised everyone will have access to “free, impartial, face-to-face guidance” on their retirement options.
However, the industry has been divided over the role insurance companies should play in delivering the guidance. The Treasury is understood to favour provider involvement amid fears the service could “fall over” if their is significant demand next year.
In its response to the consultation on the pension reforms, Apfa says: “For the service to be truly impartial it would need to be delivered by an organisation that has no vested interest in the outcome.”
The IFP says providers cannot offer savers impartial help.
It says: “We believe advice cannot be impartial and consistently high quality if given by product providers.
“There is an inherent conflict of interest that is difficult to manage. The proliferation of past mis-selling scandals should confirm this.”
Both the IFP and Apfa favour giving third party organisations, such as TPAS and the MAS, responsibility for offering savers retirement guidance.
Consumer group Which? also says the guidance must not be delivered by insurers.
A survey of 2,000 consumers Which? conducted as part of its response to the consultation found 65 per cent of people would not trust providers to deliver the guidance.
The figure rises to 76 per cent among people aged 55-65. Almost two-thirds said they would trust an independent group like TPAS.
The Personal Finance Society, the advice arm of the Chartered Insurance Institute, was less focussed on which group should provide the guidance but called on minimum standards for any group providing it: ”We believe the only way of ensuring this is for all organisations offering guidance to be able to demonstrate their adherence to an integrated set of not just standards but also training, accreditation and revalidation requirements”
The Treasury has made £20m available to set-up the guidance solution, with ongoing costs covered by a levy on providers and trust-based pension schemes.