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The guidance lottery: MM reveals ‘worrying’ gulf between TPAS and Citizens Advice

Concerns about the pensions guidance service being offered by Citizens Advice are mounting as exclusive data obtained by Money Marketing reveals that those who use The Pensions Advisory Service are more likely to shop around and seek regulated advice.

The Pension Wise guidance service was launched alongside the pension freedoms in April and comprises telephone support from TPAS and face-to-face guidance from Citizens Advice.

Since April, Pension Wise users have been asked to volunteer for an ‘exit survey’ that quizzes them on both their satisfaction with the service and what they plan to do next.

To date the Government has only reported satisfaction levels and has repeatedly blocked Money Marketing requests for information on the service, which is paid for through an industry levy. Advisers will contribute £4.7m of the £39.1m funding costs in 2015/16.

However, Money Marketing analysis of official Government figures obtained through the Freedom of Information act reveals exactly what savers intended to do after receiving guidance in the first six months of the freedoms.

The numbers show that Pension Wise customers who visit Citizens Advice are less likely to want regulated advice and less likely to shop around, while also being more likely to seek additional information from alternative sources.

So, is there a fundamental problem with the way Citizens Advice is guiding retirees? And what questions do the results raise about the future delivery of Pension Wise?

Guidance split

In surveys of more than 16,000 users conducted by both Citizens Advice and TPAS between April and the end of September, 38 per cent reported an intention to speak to an adviser following their guidance session.

Similarly, across both services, 29 per cent said they planned to shop around to seek a better deal from an alternative to their existing provider, while 41 per cent said they would seek more information.

However, the surveys also lay bare a significant disparity in the behaviour of those who receive guidance from the two organisations.

While almost half of TPAS customers expressed a desire to seek advice, just one in three Citizens Advice visitors said the same.

And while 40 per cent of TPAS users said they planned to shop around, the same was true of just 25 per cent of those who had a face-to-face session with Citizens Advice.

Citizens Advice users are also more likely to seek more information from an alternative source.

Barnett Waddingham senior consultant and former TPAS chief executive Malcolm McLean says the figures raise questions about the quality of the service being provided in the face-to-face sessions.

He says: “Are people asking questions that their Citizens Advice Bureau can’t answer? There has always been a worry as to the competence of Citizens Advice because they weren’t recruiting the same quality of guider as TPAS, and they weren’t even asking for pensions experience. My experience has always been that these people can ask you anything, so you need to be pretty well genned up, and the fact that people are saying they need to get more information somewhere else could be reflective of that.

“I find the shopping around point worrying too. On annuities, people really need to shop around to make sure that they get the best deal, and that’s even true for drawdown.”

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Parliamentary scrutiny

Conservative MP Craig Mackinlay says he will lobby fellow Work and Pensions committee members to apply further scrutiny to the Government’s guidance guarantee in light of the findings.

He says: “We have already done some work on the pensions guidance and advice market, but we came at it from a different angle and we didn’t come up with this. It’s possible that the Citizens Advice service is not as fulsome and as all-encompassing as we’d like.”

Fellow committee member and pensions all-party parliamentary group chairman Richard Graham adds that quality of service remains difficult to assess.

He says: “Citizens Advice has hired some very good people, and I have done a mystery shop myself on TPAS and come away quite impressed.

“But I have recommended to [Work and Pensions committee chairman] Frank Field that committee members go to TPAS and listen in on the telephone calls so they get a sense of how deep the guidance is, and I have suggested we also look at the practicalities of doing something similar with Citizens Advice.”

Aviva head of financial research John Lawson argues that while different kinds of customers may be using each service, the Government and Citizens Advice should seek to analyse the discrepancies.

He says: “If I was in charge of that service I would certainly want to find out the reasons. It might be that they are serving different customers but we would certainly want to know why that is happening, because it might be that Citizens Advice could learn something from TPAS.”

Apfa director-general Chris Hannant agrees: “There’s probably a lesson to be learned in having a look at the people going through the different processes and whether they are getting comparable experiences.

“If you have similar cohorts going through either, and that is broadly consistent, you wouldn’t expect such a large divergence in outcomes.

“People need to get a consistent form of service and you would need to check that there is equal information on the benefits of financial advice whichever route you go down.”

A Citizens Advice spokeswoman says: “Thousands of people have had a Pension Wise appointment with Citizens Advice and the satisfaction survey shows people are really pleased with the high quality service they’ve received.

“What someone says they are going to do following a Pension Wise appointment bears no reflection on the quality of the service they have received.”

A Treasury spokesman adds: “Pension Wise has been a real success story, with over 1.8 million visits to the website and over 35,000 guidance appointments delivered since April.

“The guidance is delivered consistently across the service, whether it is over the phone, face-to face or through our website, and feedback has shown that satisfaction with both the service and guidance remains high.”

Advice hand-off

Although industry figures have welcomed that more than a third of people who take Pension Wise guidance say they plan to speak to a regulated adviser, they say the number who actually do so is likely to be lower.

Sesame Bankhall Group executive chairman John Cowan says: “I just don’t get the sense from talking to advisers there’s a whole lot of people beating a path to their doors.

“I suspect that while there’s a number of them who might plan to go and see an IFA, they later say ‘gosh, that seems like a lot of money’.

“The problem for advisers is that those people are only looking at one side of the equation and they are not seeing the benefits.”

Former shadow pensions minister Gregg McClymont, now head of retirement savings at Aberdeen Asset Management, says the figures indicate strong appetite for advice in the aftermath of pension freedoms. “The big challenge now is economic – how to provide advice at a price which savers will pay. Thus the Financial Advice Market Review has a huge responsibility on its shoulders to provide a solution.”

Despite the findings, Graham says the Government should not set explicit targets for a proportion of Pension Wise users to seek financial advice.

He says: “If 40-odd per cent of guidance users take advice, that’s a step in the right direction. But I don’t think it’s for the Government or the Work and Pensions committee to decide that. We should be more focused on the quality of the outcome.”

Adviser views

Robert Reid, managing director, Syndaxi Chartered Financial Planners

The figures reflect the fact people coming out of these sessions with Citizens Advice think they have just received advice. It’s less of a problem with TPAS because the people working within that organisation are well aware of the difference between advice and guidance. I’m less convinced that the same is true for the staff at Citizens Advice.

That doesn’t necessarily mean the service is of lower quality, but it does mean those people visiting Citizens Advice have a less clear position going forward.

Scott Gallacher, director, Rowley Turton

We are a relatively successful firm and get a reasonable number of non-referred clients, but we’ve only had two or three Citizens Advice enquiries in the last few years. The exit survey results are alarmingly different for both shopping around and seeing a regulated adviser. That definitely merits further investigation. It would be interesting to see what the differences are in the training, because TPAS seems to have a better understanding of who we are and what we do and that we are not some evil, commission-hungry sales people.

On the grounds that we are paying for it, it’s fair and reasonable that we get a better understanding of what is being said and why these differences exist.

Expert view

More people who have been to Citizens Advice for Pension Wise guidance say they need to get more information.

Is that a reflection of the quality of the service at Citizens Advice? Are people asking questions that their CAB can’t answer?

There has always been a worry as to the competence of Citizens Advice because they were not recruiting the same quality of guider as TPAS, and they were not even asking for pensions experience.

My experience has always been that these people can ask you anything, so you need to be pretty well genned up, and the fact that people are saying they need to get more information somewhere else could be reflective of that.

The small numbers who say they are unsure are more worrying. If they have been through everything then the least you would expect is that they would know what options are attractive to them, and they should know what they could or should do.

Clearly, someone needs to be examining the quality of the service but at present there seems to be no indication as to whether that is being done.

The Government needs to make sure that people are being used properly and that they have the necessary skills and expertise to give the quality service that we all need to see.

Malcolm McLean is senior consultant at Barnett Waddingham


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There are 17 comments at the moment, we would love to hear your opinion too.

  1. Perhaps a telling point is that those in TPAS get some sort of pay while those in CAB are all pro bono. Yet again it would seem – you get what you pay for.

  2. I attended a local FSB event where a representative of CAB was presenting on the new pension freedoms, when asked a general question on regulated advice, the impression given was that this was quite costly and only appropriate for the more wealthy in society. I admit this is only one CAB individuals opinion, but if this viewpoint is commonplace within the organisation, it may in some small way contribute to the reported outcomes.

    • So Gary….We all must be wrong and RDR was just a dream, and all IFAs will gladly see clients with £8,000 pots now…phew what a relief!!….best tell Frank Field and his team to stop what they are doing ASAP (and save some money) as the Advice Gap doesn’t exist.

  3. When you consider the demographics for the likely users of each service the findings are less worrying. For most CA clients paying for professional advice isn’t a realistic option so there is no surprise that a lower proportion seek it following a guidance session. Those contacting TPAS on the other hand will typically be higher earners with sophisticated advice needs.

    • Well done Mark….someone that is logical and speaks common sense at last!

    • Samantha Nicholls 4th December 2015 at 1:35 pm

      And of course just because a client says that need more information does not necessarily mean about pensions, it could equally be about benefits or debt issues, and the how their choices could impact on daily living – a lot more likely with a CAB client

      • You are absolutely right Samantha….Unfortunately though, I feel there are too many people looking for faults within certains aspects of PW that iin truth just don’t exist…..I suppose by doing this they think it backs up their argument.

  4. Were the FCA to mandate OM as the default option for pension funds soon to be vested, this discussion wouldn’t even be taking place.

  5. Another interesting statistic regarding the figures published is that although there were 16,008 surveys completed by PW users 4,662 were done by TPAS and 11,346 were done by CAB. However, there is only approx 40 guiders at TPAS and approx 300 at CAB, meaning each CAB guider had only 37 users and each CAB guider had 116, more than 3 times as many.

    The Government/Treasury made a huge mistake when deciding to use CAB to deliver the F2F guidance and it will never work or be successful in attracting sufficient user numbers.

    The reason why is that a lot of people wouldn’t be seen dead in a CAB office, there is a huge stigma attached to it and they regard it as a place the ‘Jeremy Kyle’ type go. They liken it to going to a food bank or social security office and feel the only people who use it are people in debt up to their eyeballs, problems with their benefits, council housing issues or the bailiffs ready to call and the like!

    Also CAB see PW users as an opportunity to peddle their other services, hence recent reports of PW guiders being used/trained in non PW work.

    • Weird terminology “peddle other services” when all services are free to the User.

      • Yes I know they are free to the user, but I was highlighting the fact its more of a benefit to the actual CAB office to have more people using their services (whether they need it or not!). As they can use this when they come to apply for further funding to keep employed staff (such as you!) in cushy jobs.

    • Many locations for guidance sessions are outside of CAB offices, such as libraries. Goodness knows what “types” would frequent those. Maybe it was the impartiality of CAB which the government was attracted to – offering services to whoever asks for help – regardless of background, circumstances, or size of pension.

  6. Aren’t any of the interviews recorded/assessed by a competent person in CAB?

    • Yes they are, interviews are observed on a regular basis.

      • My question would be who are they observed by and what qualifications, experience and knowledge does that person have?

        I see many “experts” who really don’t understand pension freedoms themselves. Having trained over 150 “experts” on the subject all over the country and spent about half a year studying the subject, there are lots of implications to the changes that most people are oblivious to.

        Many people may not be able to afford to pay for advice, however if they are saying they don’t want or need advice, that implies they may well not have understood what they are being told given how complicated the subject is.

  7. I have been dealing with a new client who saw a Pension Wise “adviser” at CAB. He said he had not been impressed, and came away “none the wiser” (pun not intended).

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