Every time I read or hear the name of the pension guidance service Pension Wise I think of Morecambe and Wise, the British duo of talented comedians and imitators. But the similarities end at their names. The Government has made it clear that in order to protect consumers and ensure the guidance brand is trusted it will make the imitation of the Pension Wise service illegal through the Pension Schemes Bill.
Anyone seeking to pass themselves off as the service could face prosecution. This is no joke.
The 300,000 people a year with defined contribution pension schemes reaching age 55 will be able to deal with the Treasury, which is offering Pension Wise through The Pensions Advisory Service and the Citizens Advice Bureau. Let’s hope these two businesses receive the accolade awarded to Morecambe and Wise – “the most illustrious, and the best-loved, double-act Britain has ever produced” – as they have a demanding time ahead.
It worries me that consumers with complaints about Pension Wise cannot approach the financial or pensions ombudsman, instead having to contact the Parliamentary and Health Service Ombudsman instead. How can we expect the PHSO to deal with complaints about pension taxation matters, lifetime allowances and protected pots? These are areas of planning that may not be included in the guidance provided by those working under the Pension Wise brand.
I, like many readers, will have little experience of what the PHSO does. Its website’s homepage says it received 40,00 (yes, a typo!) complaints last year, ranging from acute trusts, the electoral commission and the foreign and commonwealth office. They are not going to know what has hit them when they get complaints about complex pension matters.
However, do not fear: the FCA has been briefed to monitor the Pension Wise complaints process. But surely the FCA has more compelling ombudsman issues to sort out? In particular with the FOS, such as the details provided within suitability reports, where there is no joined up thinking about what level of detail is needed to adhere to COBS and the protection needed if there is a complaint of unsuitable advice being provided? The regulator now also needs to monitor the fine line between guidance and advice, as the final rules have been issued.
The complaints about Pension Wise to the PHSO will roll in in their thousands. This will be particularly true as interest rates rise, making annuities more attractive. People may not be aware of the benefits of a widow’s annuity protection as it reduces the annuity amount but could leave the spouse in poverty. The costs of drawdown can vary and, as under the guidance rules, Pension Wise deliverers cannot recommend which product provider a person should invest with. As for the omission of client specific pension taxation advice, this is an area that will also cause many complaints, as people taking cash get an unexpected tax demand months after taking pension cash benefits.
So, what do you think of it so far? “Rubbish,” as Morecambe and Wise would say.
Kim North is managing director at Technology and Technical