Money Advice Service non-executive director Laurie Edmans says mortgage lenders should pay towards the guidance guarantee levy in order to reduce costs for regulated advisers.
Speaking to a fringe event at the Liberal Democrat conference in Glasgow yesterday, Edmans, who was speaking in a personal capacity, claimed advisers would benefit from the guidance regime.
Alongside new freedoms to allow savers to access their pension pots, the Treasury has pledged to offer all over 55s free, impartial, face-to-face guidance by next April.
Edmans, who has worked for 50 years in the sector, said: “I find it surprising that mortgage lenders, as things are currently laid out, are not contributors to the guidance guarantee. The potential use of pension pots to pay off debts feels like a straight source of benefit for lenders. If they were included the proportion borne by advisers could go down.
“The argument I put to financial advisers is that any measure that increases engagement will reduce their acquisition costs and increase the size of their viable market. It would be a much easier one to win.”
Apfa director-general Chris Hannant said the cost to advisers of the guidance guarantee levy had to be proportionate. The trade body has previously said the current framework would cost advisers 5 per cent of their profits.
He said: “While we recognise that financial advisers should pay their fair share we have to be careful because if it is disproportionate then it will have a knock-on effect on the cost of financial advice, which runs counter-intuitively to the cost of the policy.
“I would just make the point that the whole financial advice sector is smaller than Aviva’s UK pensions business alone in terms of turnover and profitability.”
Pensions minister Steve Webb said: “I agree with Chris that we need fair funding but I see this as an opportunity for financial advisers. Some people say the guidance regime might harm them but I use the analogy of fine wine tasting.
“I see IFAs as fine wine so that once people have the guidance, get information and realise they have options they didn’t know they had, they can go to an IFA. We need to make sure there is mid-market advice available.”
The guidance framework is being designed by the FCA and will be delivered by the Money Advice Service and The Pensions Advisory Service. It will be paid for by a levy on pension providers and financial advisers, with the total cost still to be confirmed.
Webb said the guidance will be soft launched before next April to test its effectiveness.