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Treasury pushing for provider role in Budget guidance

The Treasury favours involving providers in delivering Chancellor George Osborne’s retirement guidance guarantee amid fears the service could “fall over” if there is significant demand next year, Money Marketing understands.

The Chancellor promised that everyone will receive “free, impartial, face-to-face guidance” when they reach retirement during his Budget speech in March.

The commitment is designed to support radical liberalisations that mean anyone aged 55 or over will be able to take their entire pension pot as cash from April next year.

However, the question of how the guidance should be delivered has divided the industry. In March, Money Marketing revealed two major providers had raised the possibility of quitting the Association of British Insurers if the trade body did not insist the guidance is offered independent of members.

Money Marketing understands Government officials have held talks with senior industry representatives in recent weeks during which it was made clear that the Treasury favours providers offering guidance to savers.

One senior industry source says: “If you are a civil servant then you just need something pragmatic that means you have delivered what the Chancellor promised.

“The Treasury is terrified millions of people are going to ring within months of the guidance launching.

“They see a systemic delivery risk that if we have a single utility to deliver the guidance and demand is strong it will fall over. Therefore they want to lean on the providers to make sure it works.”

Another source says: “The Treasury wants providers involved. Their priority is delivering a system that is sufficiently robust by April 2015.

“Ultimately the Treasury feel they need to get a something in place so they can say Osborne has stuck to his Budget pledge.”

Syndaxi Chartered Financial Planners managing director Robert Reid says: “I do not think providers have the skill set within their own staff to run a service like this.

“This is about the Treasury wanting something to succeed because there is an election next year. It is nothing to do with the quality of the service provided.”

A Treasury spokeswoman says: “No decisions have been taken. We’re committed to impartial and consistently high quality guidance and are currently consulting on the delivery model that will best achieve this. We will publish our response in due course.”

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Translated, this story reads: HM Treasury civil servants priotitise saving George Osborne’s face over a) logic b) common sense, and most hypocritical of all c) retiring consumers. No wonder there is disenchantment and mistrust of politicians.

  2. Will these numpties ever learn?

    Same edition had this:

    Kim North: Providers can’t deliver personal advice .

    Perhaps KIm needs to get herself down to Horse Guards Road with a blackboard and some chalk and give these bufoons a seminar. (But Kim, please use simple language!)

  3. Philip Castle 23rd May 2014 at 6:36 pm

    What about a simple solution.

    The FCA implied that anything under £100k was potentially unsuitable for drawdown, which I would agree. BUT I have advised many people with only £20k to take a PCLS and leave the balance invested (those rising 50 year olds who would have the door shut until 55) we discussed the risks and made a decision what was best.

    Going forward, what if the FCA make a public statement (they are after all supposed to be Independent from Govt to the effect)

    1. Guidance can only be given to the over 55s
    2. It is NOT suitable for those with funds over £100k under ANY circumstances
    3. For funds between 50 and £100k operate a voucher system for 40 minutes with a qualified and authorised adviser.
    4. Anything under say £50k will probably be suitable for guidance, but operate a voucher system for x 20 minutes with an adviser to discuss the issues, but NOT recommend that has to be paid for of wanted and adviser to have backstop of FOS waiving pursuit of those willing to help consumers.
    5. Accept that guidance for anything under say £25k is probably more cost effective than paying for regulated advice.

  4. I’ll just bet Chancellor George Osborne ” wants the provider ” left after meltdown in the insurance industry – and sell off to so many American and European firms – to ” get involved ” in putting in place Osborne’s ” ropey ” auto enrolment. Already Conservatives ( Eton’s Elite ) have failed to provide a solvent State Pension – and have introduced Forced Enrolment – for those in employment – whilst applying a further Tax on Every Employee and ” associated person “, and the inherent problems of further concerns and increased tension in Employee, Employer relations – which reduces – business output and has a direct impact on the business – and the business profits. I have the answer – I am making my employees redundant. I have costed out the finances and it will be only a few years before the break even point – but from then on I am saving thousands of pounds. Given that the Auto enrolment commences with a 3 % Employer contribution – I assume it will increase in line with or above inflation ( I have not taken inflation or above inflation increases into my calculations ) – and if we follow Australia could rise to some 28 % of salary – a tax I cannot afford – nor would I want to contribute. Our employees already paying National Insurance – for state pension, maybe – a result of Gross Negligence by Labour and Conservative and the Scottish Pension “Robber”, Gordon Brown during his playtime – as a ” Prime Minister “. Such senseless stupidity ( and permitted by his Party members ) – will have a greater impact on the working people of the UK – than the stupidity of Gordon Brown selling the Gold reserves . Still he has retired to the Kirkcaldy, home to other, out of date and out of work products – Linoleum .

  5. Samuel Lewis Mayes 26th May 2014 at 9:29 am

    I hope that this impartial guidance doesn’t morph into target driven impartial guidance by the providers. Naturally it will.

    The next scandal when client money runs out?

    Sam

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