Chancellor George Osborne’s radical pension reforms have taken centre stage since they were announced in last month’s Budget but there are plenty of other regulatory changes to keep abreast of.
April saw the introduction of new FCA rules banning payments between fund groups and platforms and most cash rebates to savers.
The bigger impact on the sector will come in two years’ time when the payment ban to platforms will be applied retrospectively, leading to the removal of trail on related assets.
However, there are some important variations in the tactics of different platforms in relation to the way rebates are paid to clients, the interest paid and how long clients have to wait to receive rebates owed to them.
As our cover story investigation reveals, the new world appears anything but clean and transparent. The Platforum managing director Holly Mackay hits the nail on the head when she says the huge differences highlight the “utterly confusing world which consumers, indeed all platform users, have been ushered into”.
Rethinking default strategies
The new pension flexibilities announced in the Budget mean providers are having to reassess default investment plans which are currently based on restrictive pension rules that will soon be out of date.
Firms are having to think again about strategies based on the assumption that savers would use their pots to buy an annuity or move into drawdown at a certain date.
In this issue we hear from Nest, which operates a target date fund model, about some of the ideas it is thinking about to take account of the freedoms offered by the Chancellor alongside the views of other significant players such as Legal & General and Scottish Widows.
Advice for Osborne on guidance
Elsewhere, after our recent cover story questioning Osborne’s pledge of “free, impartial, face-to-face advice”, we speak to Financial Services Consumer Panel chief Sue Lewis about the Chancellor’s plans. She believes that the Government should rethink the face-to-face aspect of the service and that while the “free” service will inevitably be paid for by savers, it should be a price worth paying.
April also saw the introduction of the FCA’s new pension illustration rules, which will lower projections.
Finally, in his latest article, Taxbriefs editorial director Danby Bloch discusses how to mitigate some of the negative messages but questions whether current charges are sustainable under this new environment.
Paul is group editor at Money Marketing- follow him on twitter here