View more on these topics

Kim North: Ditching guidance in favour of advice

Kim North

I know we cannot all get what we want all the time but I have always believed advice should be available to everyone. Why? Because research shows time and time again money under advice is more efficiently managed for individuals in both sickness  and health, in poverty and in prosperity.

But it is important consumers know what is regulated advice and what is guidance, particularly understanding which provides recourse should things go wrong. With this in mind, I am pleased to see the Government finally admit in last week’s Budget that the Money Advice Service brand is “misleading” to consumers.

The Budget documents also announced the statutory financial guidance providers – the MAS, The Pensions Advisory Service and Pension Wise – will be restructured. This makes total sense to me as the three publicly funded bodies have independent strategies and business plans and there is no requirement for them to consult the other publicly funded bodies in developing financial guidance. I have mystery shopped all three services in the past. The guidance from each was different and in some instances technically incorrect, which is most concerning.

A new service is to be launched that will make sure consumers can get all their questions about pensions answered in one place at all stages of their lives. There will be a new, slimmed down money guidance body charged with identifying gaps in the financial guidance market and commissioning providers to fill them.

For me, the only way it can work is if those under guidance are encouraged to seek regulated financial advice. This way they will benefit from our industry’s technical skills, as well as gain Financial Services Compensation Scheme and Financial Ombudsman Service benefits.

Yes, the FCA and the RDR have made a trip to see an adviser price prohibitive for many but the Budget announcement on the increase in the tax and National Insurance Contributions relief available for employer-arranged pension advice from £150 to £500 from April 2017 is welcomed in this regard.

Five hundred pounds seems to be the magic number for advice. Indeed, the Financial Advice Market Review final report, published at the beginning of last week, announced a consultation on introducing a pensions advice allowance, which will allow people to withdraw £500 tax-free before the age of 55 from their defined contribution pension to redeem against the cost of advice.

It will be interesting to see if the  DC pension investing public seek advice on whether it is sensible to cash in £500 from their pension in order to seek advice.

I am not convinced taking money from a tax-advantaged environment that may have more than 20 years left to benefit from growth is right for the average DC pension investor.

What I want – what I really, really want – is the equivalent of a 401k plan for the UK. The Lifetime Isa is a small step in the right direction.

Kim North is managing director at Technology and Technical 



Osborne unveils Lifetime Isa

The Government is to introduce a Lifetime Isa to allow consumers to choose whether to fund their first property purchase or their retirement from next year. From April 2017, people under 40 will be able to contribute up to £4,000 a year into the new Lifetime Isa. The Government will top up savings by £1 […]


Govt eyes £500 access to pension savings

Treasury officials are looking at allowing savers to withdraw £500 of their pension savings to fund access to financial advice. The plans come as part of the Financial Advice Market Review, launched earlier this morning. The review, jointly led by the Treasury and the FCA, proposed the change as a way to make  advice more […]


Does pension tax relief U-turn pave the way for salary sacrifice reform?

Abandoned plans for reforming pension tax relief could push the Chancellor towards cracking down on salary sacrifice in tomorrow’s Budget. At the last Budget, in July 2015, the Government said it would “actively monitor” the growth of schemes, which allow firms and employees to reduce their National Insurance bills, as the “cost to the taxpayer […]

Lee Robertson

Lee Robertson: MAS should have been reformed, not abolished

Last week’s Budget contained some big news for advisers, not least the announcement of the demise of the Money Advice Service. After six controversy-filled but rather self-congratulatory years it appears MAS is to be retired by the Chancellor. Those six years have seen runaway spending of over a third of a billion pounds, which beggars […]

Bonds in 2017: Stick or twist?

Royal London Asset Management Bond Fund Managers Paola Binns and Craig Inches look at why short duration could be a key tactic for fixed income investors during 2017. Read the full article here The value of investments and the income from them is not guaranteed and may go down as well as up and investors […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm