Providers are calling for the Money Advice Service’s marketing budget to be cut to help fund the Government’s guidance guarantee.
Providers argue this would minimise costs being passed on to consumers, though Apfa warns it would create an “unacceptable” risk of the service being partly funded by advisers.
The guidance guarantee is designed to support radical pension reforms announced in the Budget. The Government has committed £20m to fund start-up costs, and will impose a levy on pension providers and trust-based schemes.
Cost estimates published by the Association of British Insurers last week put the cost of the service at up to £13m a year.
The ABI, Apfa and the Institute of Financial Planning have all said they favour third party organisations, such as the MAS and The Pensions Advisory Service, delivering the guidance. For 2014/15 the MAS set aside almost a third of its £43m money advice budget for marketing and communications spend at £13.5m.
Aviva head of policy John Lawson says: “If the MAS was to deliver the service, it would have hundreds of thousands of new customers every year so there would be no need to spend so much on advertising.
“We believe that MAS and TPAS should deliver the guidance, but we need to reshape existing resources and find efficiencies rather than committing new spend.”
Royal London chief executive Phil Loney adds: “Providers are a significant funder of the MAS and if we channel customers to them it is perfectly reasonable to say ineffective marketing should be stopped.
“The cost of guidance will be passed on to consumers so it makes sense to use some of the MAS’s existing budget.”
But Apfa director general Chris Hannant says the size of the MAS budget and the cost of the guidance are separate issues, and to conflate the two causes “confusion”.
He says: “Providers should bear the cost of the guidance. It would be entirely unacceptable for this to be centralised and funded by all levy payers.”
A MAS spokeswoman says: “This is a hypothetical question. Only when we know what work we will get can we work out how this will be delivered.”