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Steve Webb: Budget guidance will boost regulated advice

Pensions minister Steve Webb says the at-retirement guidance announced in the Budget will lead to more consumers getting regulated financial advice, but is wary on requiring providers to pay for full advice rather than guidance.

Speaking at a work and pensions select committee hearing this morning, Webb said the guidance backing the new pension freedoms outlined in the Budget will not be independent financial advice, but added “guidance will lead people to take more formal advice”.

Liberal Democrat MP Mike Thornton suggested a provider levy was needed to fund “proper financial advice” instead of guidance.

Thornton raised concerns that as guidance will not include a fact-find, it could fall short of what is necessary to help people make the best decision.

He said to Webb: “I am not saying you have to commit but I would ask you to look at guidance as advice paid for by providers.” 

Webb said he is looking at all the options but that the cost would inevitably be paid for by consumers. Webb said: “We have to be careful.”

Thornton also suggested it would be better to prevent “direct selling” and for consumers to be directed towards independent financial advice.

Webb said: “The cost of an IFA would be very big for a small pot… forced advice would be a real challenge.”

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. I hope that financial advisers category will be exempt from any guidance advice failures in that case particularly when it comes to FSCS and FCA fees.

  2. Clown in a circus.

  3. The pledge of free face to face advice announced in the budget was clearly not thought through and made on the hoof. Either there will be a U turn or it will be dumbed down.

  4. Has it come time for AIFA or some other trade organisation to take legal action on the definition of regulated advice/guidance? It strikes me that those individuals in both politics and head of regulators have no real understanding of financial services legislation. It clearly states within regulations that if you give a personalised recommendation e.g. face-to-face you have to be authorised and regulated to do so.

    That is not guidance that is face-to-face regulatory advice Mr Webb!!!!

    Any person given guidance on an introducer basis would have to do so on a heavily scripted process which would take away any benefit to the client. After all as soon as the client utters the words what would you do – what is that person in the scripted scenario going to say.

    Instead of trying to circumvent the regulations may be the government should spend more effort in trying to support the adviser community so we can bolster our numbers and invest in our businesses with confidence!

    Stop pandering to insurance companies and large banks who are looking to sell products on execution only models or other models disguised as guidance but in fact are execution only!

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