It's the holiday season and my normal leisure reading has been replaced by the Treasury select committee's report, Restoring Confidence in Long-term Savings.
The report pulls no punches and makes some important points but it loses the plot and comes out with gems such as “financial advisers who gain their rewards either from commission or fees. We recommend that the industry should explore alternative arrangements for advice based on the industry's duty of care to the customer”.
So no fees or commission? Does this mean we go all for pro bono? Why don't they suggest an alternative? Or is that like a definition of misselling and placed on the too difficult pile?
The report also points out the rise in stakeholder charge to 1.5 per cent is for advice and not for the insurers to pocket. Or will we hear them cry, but we were losing money? I suspect we will and the irony is that as client reviews become the norm, an annual charge for advice of 3 per cent of assets starts to look about right. Doesn't that prove that the setting of arbitrary caps distorts the market until common sense takes over?
The reality is simple – we have a large section of the population who cannot afford to save. We have others who need advice but refuse to pay for it and believe in the equivalent of the tooth fairy – free advice. But most important, we have too many who firmly believe there is no need as the state will provide. If sensible provision is to be made, the Government must be direct in their message, and stress that state benefits are a safety net not a default income source. In short, the message is – you are on your own, no booklets, no websites, just straight, no-nonsense advice.
So, as the consultative papers slow to a trickle, we have the time to respond, which we should do in number. Don't leave it to others. If we all submitted responses making similar arguments in a variety of ways, the sooner they will acknowledge that it is not just the advisers to blame.
We need to respond with positive and well thought out comment. The comments from the Treasury Financial Secretary on pension credit cannot and should not be lost.We know the answer on pension credit and its disincentive to savers at the lower end of the market.
As to the much lauded success of the builders' stakeholder arrangements, does my memory fail me or did this replace the old holiday stamp scheme and, given the level of contributions, is this not a misselling issue when the tax relief at 22 per cent causes a 40 per cent or more reduction in retirement benefits. I think we need a response on pensions credit and we need it yesterday.
The one thing about my usual holiday reading is that authors like John Grisham know how to tell a story, whereas these reports seem to be missing that all important climax, where everything suddenly comes into focus. Let's hope the epilogue will be along soon.
Robert Reid is director of Syndaxi Financial Planning