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.