The Personal Finance Society is calling on the Government to scrap the requirement for those with safeguarded benefits to take advice before accessing the pension freedoms.
PFS chief executive Keith Richards says forcing the public to pay for advice they do not want is damaging consumers’ perception of advisers. He is calling for the requirement to be ditched unless regulatory changes are made.
The Government has mandated that savers with safeguarded benefits worth more than £30,000 get regulated advice before taking their pot as cash.
But in recent weeks national newspapers have slammed pension providers for blocking savers from accessing the pension freedoms, with “expensive” advice costing up to £1,000 listed as one of the barriers.
Last week insurers argued the advice requirement for guaranteed annuity rates should be dropped.
Now the PFS says the requirement to take advice should be replaced with a “strong recommendation” for advice.
Richards says: “Mandating regulated advice is a key risk mitigation solution of the reforms but is already impacting on both the public and advisers.
“Forcing the public to pay for professional advice when they don’t want it is a contradiction of pension freedoms and will unfairly impact on the public’s view of advisers as depicted in recent national media reports.
“If changes to regulatory process and liability are not going to be updated in line with Government reforms, then the mandating of advice must be removed and replaced with a ‘strong recommendation’, ensuring that only those consumers who feel they would value from it would proceed.”
Richards says growing numbers of advisers are deciding not to engage with consumers who wish to transfer out of a defined benefit scheme because of liability risks, and this is impacting on the availability of advice to meet demand.
He adds: “We are seeking agreement to introduce a clear process to protect the public’s best interests but without denying them the right of freedom or leaving the profession exposed in the future.”