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Peer calls for Budget guidance to go beyond pensions

A proposed amendment to pension laws would force the organisations offering the Government-backed guidance service to assess clients’ wealth beyond the scope of pensions.

The free guidance sessions are a crucial part of the Government’s revolutionary reform package that gives savers far greater control over their pension savings. It aims to bring in safeguards from April 2015 when savers can cash in their entire pension pot.

Crossbench peer Baroness Greengross has tabled an amendment to the Pension Schemes Bill that would make it a requirement of guidance partners Citizens Advice and The Pensions Advisory Service to ask about “other potential sources of retirement income in addition to defined contribution pension schemes”.

This could include an assessment of housing wealth, savings, and investments, the amendment says.

The Bill will pass through the committee stage of the House of Lords – where the detail is examined line by line – on 7 January. The Government has said the guidance service will be in place before April, when the freedom and choice reforms take effect.

Current FCA standards for the service say a guidance session must “request information about the consumer’s financial and personal circumstances that is relevant to their retirement options”, but does not go as far as enforcing an assessment.

Under original proposals, advisers were set to foot up to 30 per cent of the bill for the service, which also received a £20m start-up payment from the Government.

However, in November the FCA backtracked and proposed halving advisers’ contribution to the levy. It said it was unclear how advisers would benefit from the service and that consequently they should pay less than other sectors that would clearly benefit, such as banks and life insurers.

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Comments

There are 12 comments at the moment, we would love to hear your opinion too.

  1. Hmmm, this is getting into very dangerous territory. Before long CA and TPAS could find themselves sailing very close to the wind regarding their “guidance” become regulated advice, whether that is a matter of fact or only perceived. Remember the FCA have said in th east “if it looks and sounds like advice…… it probably is advice.

    It could get very messy

  2. Is this person completely insane

  3. A good example of ‘advice creep’

  4. Are the powers that be starting to realise just how much is actually involved in retirement planning?

    The issue is always going to be what will the guidance providers do with any information they collect? It is all well and good mandating that they take info regarding other wealth, existing investments and property etc but what then?
    “Ah Mr Client you have £50k in a bond, have you considered using that to provide you with some income as well as your pension?”
    “How do i do that?”
    “errrrrrrr…………………i don’t know. I suggest you search for a regulated adviser”

    What a mess!

  5. Nationalisation of advice to be paid for in part by those who remain private sector advisers.

    What would private Sector Doctors say if they had to pay for the NHS?

    Private Schools are increasingly being told they must provide services to not only their paying pupils but second staff to state schools at THEIR cost. This is madness and is actually distorting state funding and taxation.

  6. No need for us qualified planners if they can do all that for free!

    So if I read this right, put us out of business by offering a free service that looks like ours, then charge us 15% of the bill for the privilege.

  7. So just repeal the FSMA 2000 and 2012 an make it a free for all.

    What is guidance service away – is it just a legal term to get round the FSMA which say that a personalised recommendation in the area of pension and investment is a regulated activity?

    Its funny that when it comes to it the government and the FCA do not care a toss about the 23,000 advisers and their support staff. If they did they would be supporting the profession instead of looking for ways to destroy it.

    People like me are looking to expand to give advice to the general public not just rich people but what support do we get from government or the FCA or even the MAS. Answer NONE!!

    CIB and PAS do a good job but we have 23000 highly qualified advices in the country that are been over looked yet again. That down from 60,000 just 7 years ago and 200,000 when you look back to the 1980s although I would not say that all of those back then were adviser as we know them today.

    The answer to this problem is to support the adviser community and for that profession to train more adviser. We can only do that if we have a profession and we are supported by sorting out issues like the amount of paperwork, claims management firms and shall I dare say it “long stop”

  8. @Peter Herd – I agree as a small firm we are happy to deal with less affluent clients (they are more fun and you can make more of a difference), BUT increased qualification requirements, regulation, risk with no longstop and proto nationalisation is separating us from those we can help. In increasing minimum equals rather than simply splitting “sales advisers” (bank and BS etc core staff) and Financial Planners (LVL 4) and Chartered or Certified Lvl6 would have allowed a career progression.
    In the last year I have helped to young people get their level 3s including mortgages, equity release and regulatory knowledge plus an understanding of the basic of investments and pension which historically would have been sufficient to advise the AE market segment, but now they cannot and as we are an Investment and Pension Advisers primarily, we will need to change our business to more of a mortgage and protection focus simply somthey can HAVE a future career. All because the FSA and Mark Hoban thought they knew better and ignored the TSC’s recommendation of a 1yr delay to RDR to iron out faults before the cliff edge change rather than after.

  9. This sounds very much like a proposal to transform guidance into a full 1:1 financial planning health check, which would definitely constitute trespass into the territory occupied by regulated financial advisers. We already have the CAB, the (mis-named) MAS and the proposal to add financial planning to the national curriculum. Additionally, most regulated intermediaries already offer prospective clients an initial consultation free of either cost or obligation, not to mention all the pro-bono work we do here and there, for which we receive little, if any, recognition from the powers that be, let alone credit.

    Free regional workshops might be a good idea, the basic agendas for which could be pretty simple, typically:-

    1. Save a bit every month on a regular basis (I wish I’d started doing so when I was in my twenties).

    2. Don’t buy things you can’t afford or don’t really need just because credit is easy to get (a lesson I learned back in my twenties).

    3. Don’t borrow money at extortionate rates of interest just because the ad’s on TV and in the papers make it sound easy and hassle-free.

    4. Protect your family, your liabilities (such as your mortgage) and your income against disaster. When you’re young, life insurance is cheap.

    5. Plan ahead and think long term. Financial security is not something that can be attained overnight.

    6. If in doubt, seek advice.

    7. Don’t assume that advice costs an arm and a leg. Advisory businesses are just that ~ businesses, with commercial overheads but, within reason, you can negotiate.

    8. Shop around to find an adviser with whom you feel comfortable. You’re unlikely to find the adviser who’s right for you on the strength of a quick half hour consultation. If you don’t get the right vibe from the first one or two advisers you meet or from what they may recommend, walk away and go elsewhere, but don’t give up on the idea.

    9. Consumer protection is now greater than it’s ever been. If something into which you’ve been persuaded to invest money goes down the pan and you’ve been mis-advised, chances are you’ll be fully protected. All advisers these days must be qualified, they must all have Professional Indemnity Insurance and they’re all regulated.

    10. Don’t be frightened by what you don’t (yet) understand. Financial planning is a process with which you must engage and learn about. But it doesn’t needn’t be bewilderingly technical.

    The basics, for ordinary people, really don’t need to be any more complicated than that ~ do they?

  10. Some excellent points so far. I’d add that increasing the burden on people wishing to use the service is likely to deter them from using it, rather than encourage them. Many people are reluctant to provide information to those they do not have a long-standing relationship with. For clients to fully open up, trust needs to be gained. This is very difficult in a 30 minute conversation, particularly when under a government umbrella.

    Leaving aside the execution, the logistics and the funding, in principle the guidance guarantee is a good idea. A non-commercial source of information, that can highlight the most likely pitfalls and scams, and then signpost to regulated firms who can help. However, somewhere along the line it grew into a panacea for all the potential negative outcomes of pension freedom, and the wishlist keeps on growing.

    Those trying to make the guidance guarantee a success really need to start looking at what elements they can trim for it to be effective, rather than what they can add to it.

  11. @Mick – I agree. The age old adage KISS. Just highlight the basics and the pitfalls with signposts to where to get regulated financial advice. The industry would probably have been happy for THIS to come out of our levies, but not to fund putting ourselves out of business with “guiders” then doing what we do, but NOT with the qualifications we have just been forced to obtain at significant time cost. No wonder they’ve stopped implying we might have to move from Level4 qualified to level6 as had originally been mooted as there would be an uproar or possibly even a revolt or claim that we were effectively Govt employees now and being made redundant by them in order for us to have to come and work for them as guiders (level3) rather than advisers at level 4 (or more, but by choice and client need).

  12. Another idea from someone who, I believe, has never worked in the regulated sector in the UK.

    By all means give advice to all..but someone has to pay for it and it should not be the IFA community.

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