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Partnership: Govt ‘free advice’ pledge undermines RDR

George Osborne’s Budget promise of “free advice” for pension savers undermines the principles of RDR, Partnership chief executive Steve Groves says.

In his Budget speech in March, the Chancellor promised everyone aged 55 and over would receive “free, impartial, face-to-face advice” about their retirement options. This pledge was subsequently downgraded to guidance.

Speaking at the IFP conference in Newport today, Groves said: “It is unfortunate that the RDR was all about placing a value on advice, making people understand it is a professional service that they pay for, and within a year or so of doing that, we have announced that we will give everybody ‘free advice’.

“That is a retrograde step in terms of getting people to value advice, and it will be really important for the industry to recommunicate the value of true financial advice through this period.”

Groves said the changes wrought by the freedom and choice in pensions reforms are on par with the impact of RDR and says a “whole group of customers” need to be re-advised.

“Insurers and advisers are going through frankly an absurd period of change,” he said.

“The impact of the Budget changes is similar in quantum to the RDR. It is a huge piece of legislative change – there will be new bodies, new processes and new products. And there is a whole group of customers who have previously been advised who we will have to think about re-advising because their options have changed.”

Groves said the specialist annuity provider does not need to change its business model “as much as the City thinks” and revealed Partnership will be launching new products after the freedoms come into effect next year.


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. Quite so, but the comment presumes that the Govt and Regulator indulge in joined up thinking.

  2. RDR was legislated compulsory redundancy for many act a relevant level 3 with new jobs now being created for quango posts for those with irrelevant level 6s. I.e. FPC qualifies advisers who have worked for 20 or 30 hears with a relevant qualification to the job they were doing replaced by graduates straight out of Unit with an irrelevant degree. If they are so clever, they should be able to pass R04 in about 1 month.

  3. Phil


  4. Contractually anon 8th October 2014 at 8:51 am

    @ Phil. Grads can pass R04 in a month. I had to put compulsory gaps in between their exams as I actually want them to retain some of that knowledge after the exam (I have one in particular that I may make sit exams again).

  5. Steve Groves makes the mistake of expecting joined up thinking between the regulator and the government. He foolishly imagines that this government that constantly spouts its support for business might actually follow up its rhetoric with actual support for businesses like his. Idiotically he expects that having just spent £3bn of other peoples money on the largest regulatory change in financial services history that the government wont then undermine it by offering its key product, advice, for free.

    Steve Groves runs a really good sound business, as do many of us in FS. Isn’t it about time we were left to get on with it without constant regulatory and political meddling?

  6. Neil F Liversidge 8th October 2014 at 9:28 am

    It’s a valid point. The FSA bored on endlessly that there should be no cross-subsidy between clients but what is guidance if not cross-subsidy? Our businesses earn income and the government via the regulator arbitrarily helps itself to a share to pay for MAG and ‘guidance’. Everyone has always agreed that advice was never ‘free’ and it still isn’t free via MAS or guidance. Ultimately paying clients fund it just like the customer ultimately pays for everything in every business. Just more political sleight of hand, window-dressing, playing to the crowd and hypocrisy.

  7. Gents I have said it before and will say it again – We are really getting into a tizzy over a tiny issue here. It is going to be a relatively small number of people in the scheme of things who are likely to go down the guidance route and then make their own decision without getting proper financial advice. A large number of minority of people who will use the guidance route are unlikely to have taken any advice anyway before the changes were announced. I would argue that the majority of those taking guidance would have been the masses who simply took their income via their own provider with no thought given to looking around so don’t worry too much about it. We probably wouldn’t have got them as clients and more than likely would not have wanted them even if they were banging at our doors. It is likely to have a very small impact on our clients because without our advice over many years they would not be in the position of having meaningful pensions in the first place. They huge majority of clients will still want our advice going into and beyond retirement. We need to all relax a bit, clam down, ignore this by and large and get on with doing business with those who value what we do. Let the Govt and regulator try to sort out the low end of the market and when it all goes pear shaped with a very low take up they will be left scratching their heads.

  8. Actually basic common sense undermines RDR but who’s interested?

  9. @ Marty sound advice, ignore it,

    Except for one thing. unfortunately the £3,000 per year levy that is going to be charged to my firm is simply something I cannot ignore

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