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More advice means more people saving

Conservative Shadow pensions minister Nigel Waterson says the Tories’ plans would reinvigorate a savings culture.


Good financial advice is central to the long-term financial health of our country. As the Shadow Chancellor, George Osborne, made clear in our new economic model published last month, we Conservatives want to reinvigorate a savings culture within Britain.

As a nation, we are simply not saving enough. The UK’s annual savings gap is at least £27bn. This would require a 54 per cent increase in levels of savings to be closed.

Around thirteen million working people save either too little or absolutely nothing for their retirement – about half the working population. This is shown by the pension pots that are being used to buy annuities – the vast majority are worth less than £40,000 and the average size is around £25,000.

A new Government needs to restore stability and confidence in pension saving. Part of that is trying to ensure that it is worth people’s while to
save at all. We need to ensure a regulatory regime which is sensible, predictable and fair, one within which the adviser community find it comfortable to operate.

An important step will be to improve the quality and availability of financial advice. Studies have demonstrated worryingly high levels of financial illiteracy in the UK and while tackling this at a young age would be beneficial, we need to accept that people need good quality, reliable financial advice as they make major decisions throughout their lives.

According to research conducted by the Association of British Insurers, nearly half of lower-earning households who save would not have done so in the absence of financial advice. Quite simply, more advice means more saving.

With better financial advice, we can help tackle not only personal debt but, in the longer-term, the savings gap.

Following the work of Otto Thoresen’s review, George Osborne has set out plans for a Conservative Government to launch Britain’s first-ever free national financial advice service to provide impartial advice online, over the telephone and in face-toface meetings.

It will cost £50m a year, to be paid for through a new social responsibility levy on the financial services sector.

I am pleased that the Government appears to have accepted this need and announced similar plans of its own.

But one cannot talk about financial advice without talking about the controversial issue of the retail distribution review.

It has been subject to leng – thy consultation and discussion between the FSA and the industry including independent financial advisers, insurers and banks.

In addition, I have had a number of discussions with IFAs, insurers and others about the review and the issues that it has identified.

I would like to see a clearer idea of what outcomes are supposed to emerge from the retail distribution reveiew. Will it increase the availability
of advice and guidance? Will there be an advice gap? Should there be a better balance between exams passed and on the job training? Is the 2012 implementation date practicable? Is there an unnecessary tension between the RDR and the European Union’s approach?

The RDR is, however, a matter for the FSA, which has responsibility for the regulation of the financial services sector and I have always encouraged IFAs to argue their case with the regulator, which is indeed what Aifa has done with vigour.

We know that the current regulatory structure failed during the banking crisis, so we have decided to scrap the FSA and transfer prudentialsupervision for banks and other systemically important institutions to the Bank of England, and a create a new consumer champion, the Consumer Protection Agency.

The RDR, as a consumerfocused initiative, will pass to the Consumer Protection Authority as the body which will take over the regulation of the IFA community. We believe that, under our proposals, consumer confidence in financial services will improve and this can only benefit the adviser community.

As I have already made clear, we must get the country saving again. And for this we must make the system more accessible, comprehensible and flexible. It is not enough for central government to shoulder the entire burden or to impose all the regulation and responsibility on businesses.

We must create a system that empowers people to make choices. For this, education and advice is paramount.

We need a grown-up debate about the sort of standard of living people want in retirement and how that can be paid for. And within this, there
is a clear role in achieving that for well trained, independent and committed professional advisers.


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. There you are then, this election is irrelevant because all power is vested in the unelected regulators who pay no price for being wrong.

  2. As a nation, we are simply not saving enough! Many IFAs having been shouting out that it takes many hours of compliance to justify a saving vehicle and yet the same client can be sold credit by a bank in less than 20 minutes! This is a further insult when the regulatory RDR is widely seen as a benefit to those same banks and a cull for 10,000 independent advisers (as predicted by AVIVA and Earnst Young).

    Two questions:

    Where does Mark Hoban Conservative MP stand on this issue – firmly in the FSA RDR camp!

    Who will be left to deliver future independent advice – the remaining 10,000 New Model fee charging elite will just not do it?

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