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Why Pension Wise failure demands independent investigation

Tom Selby White

Last Friday Money Marketing pensions reporter Sam Brodbeck uncovered troubling failings at the Derbyshire Citizens Advice branch, one of the largest in the UK.

The branch, like others across the country, has been receiving grants from the Treasury to deliver face-to-face Pension Wise guidance. The FCA has been instructed by the Treasury to raise £39.1m for Pension Wise in 2015/16, with advisers on the hook for 12 per cent of this, or £4.7m.

Now the logic for advisers paying towards this levy is, at best, loose. The Government’s argument is that a chunk of consumers who receive the very basic guidance offered through Pension Wise will go on to take regulated advice. Anecdotal evidence, however, suggests advisers have to date received little to no benefit from their levy payments.

Against this backdrop, demand for actual guidance – and I mean face-to-face or telephone rather than a click on the Treasury website – has been low, with around 1 in 10 of those accessing their pot at retirement speaking to a Pension Wise guide in the first three months of the freedoms.

The Government has predictably – and understandably given the scrutiny placed on the reforms – erred on the side of caution when providing guidance resources. As a result, both Citizens Advice and The Pensions Advisory Service have industry-funded Pension Wise guides taking on only a handful of appointments each week.

TPAS’ decision to reassign staff employed specifically to deliver Pension Wise guidance to its main phone lines is almost justifiable. Enquiries have rocketed at the service since the freedoms were introduced in April, a large proportion of which are linked to the new retirement rules.

However, the revelation at least one Citizens Advice branch is putting industry-funded guidance staff to work on non-Pension Wise tasks is far more serious.

As Syndaxi Chartered Financial Planners managing director Robert Reid told me: “Advisers didn’t sign up to pay for Pension Wise in the first place and we certainly didn’t sign up to pay for Citizens Advice.

“The money was for a specific purpose and Citizens Advice cannot simply do what they want with it. We now need an independent investigation and anyone who is involved needs to be held to account.”

Rob is absolutely right. This is yet another example of Government failing to hold itself to the same standards as the private sector it regulates so heavily. What happens when the industry’s money is handed to Citizens Advice and TPAS? Is the Government checking Pension Wise guiders are working on Pension Wise alone? How does Citizens Advice know the Derbyshire branch is the only one failing to use the resources handed to it properly?

In short – where is the audit trail?

As with much of these hastily introduced reforms, such details appear to have been overlooked. But, as a point of principle, it is hugely important. It is not for the advice sector to fund the operations of a charity like Citizens Advice.

Politicians we have spoken to have, so far, shown no interest in pushing for an inquiry into these blatant governance failings. Either they simply do not get the issue or are struck dumb by fear of criticising the much-acclaimed guidance service.

Money Marketing is prepared to send this blog, along with a series of key questions for the Treasury, to the chairs of both the Treasury select committee and the Work and Pensions select committee. To get your views heard by those in power, add a comment below this article.

Tom Selby is head of news at Money Marketing

N.B. There is also a worrying sense of mission creep surrounding Pension Wise. Citizens Advice is now proactively contacting businesses offering their services, for example, while there are also stories of guides stood outside supermarkets handing out leaflets to shoppers.

It is hard not to think of the US government’s attempts to boost employment during the Great Depression through the creation of “boondoggles” (although hopefully we will not see pension guides chasing pigeons from runways anytime soon).



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There are 13 comments at the moment, we would love to hear your opinion too.

  1. I think you should send on this blog Tom. As you say “where is the audit trail?”

  2. It really is hard to imagine that any politician will engage seriously enough with this matter to make a whit of difference. Quite simply, there is nothing in it for them either politically or financially. Only the prospect of an abject admission of failure. No hope of that then.
    The fact that the totally useless and not-fit-for-purpose, Pension Guidance service, deliverd via Pension Wise, has been strategically passed across to the DWP and the CAB and TPAS is a sure sign that they fully intend to try and bury their shortcomings and failures in the hope that the consequences will simply go away, un-noticed.
    However this is manifestly unfair on the entire financial adviser community who are paying for a lot of the cost and who have not benefited from it at at all.
    I have to say, that I find it extremely difficult to see how this manifest injustice can be stopped.
    This is yet another layer of government (inefficiency) cost being added to a growing number of other rapidly increasing regulatory levies that is already increasing the cost of advice and widening the so-called advice gap.
    The sad truth is that the Politicians and the Regulators and the FOS and the FSCS simply do not understand the utter complexity of pensions law and adviser practice, and have little or no prospect of ever doing so.

  3. It’s simple really. The clients of advisers should not be paying for Pension Wise. It has nothing to do with them and those that pay for advice should not funding advice for those that don’t.

    If the Government wants Pension Wise, they need to fund it from general taxation.

  4. The Derbyshire Citizens Advice Delivery Centre is not the only one having Pension Wise Guiders doing non Pension Wise activities, its rife up and down the country and still going on now! Also its not just when Guiders are not busy doing PW work, they are being taken off PW duties with whole days blocked off at a time and rota’s being introduced to do the non PW activities. Customers who then ring up for a face to face appointments are told only certain days are available as they have to fit them around such rota’s, and if they can’t fit them in are told to ring TPAS and have guidance over the phone. Many Guiders have left and those who refuse to do the non Pension Wise work are disciplined and even dismissed or forced to resign.

  5. There is surely enough there for the opposition to take the government to task. Pension Wise was an integral part of the pension freedoms, and frequently used to rebut any suggestion that the reforms were reckless and would leave people exposed to poor outcomes.

    Although it has faced criticism from the start, it has proven to be an even bigger disaster than feared. Limited exposure of the service due to Purdah, significantly lower take-up than even the most cautious estimates, no clear gateway to regulated advice after use, and now the revelation that PW staff paid for by levies are being reassigned to other tasks.

    The Treasury and W&P committees need to revisit the discussions and consultation minutes held prior to April 2015, and recall how much stock was put in Pension Wise to protect the public from scams and bad choices.

    The cost of the service and misuse of funds is one thing, but the bigger issue is that the service hasn’t delivered what it was supposed to. Depending on your point of view, it was either a pointless exercise all along and therefore a complete waste of money, or the failure is a contributing factor in the rise in scams and any future fall-out from mis-selling/mis-buying scandals.

  6. Andy Robertson-Fox 14th October 2015 at 5:27 pm

    There is a phrase in this article ..”Anecdotal evidence, however, suggests…..” I commented on previous articles in Money Marketıng and repeat – especıally for the FA – where are your facts on the cost and staffing figures to support your allegations, please?

  7. Rt Hon Sir Arthur Streeb-Greebling 14th October 2015 at 8:32 pm

    I think that a body should be set up to stop these type of scams. here’s my suggestion: we could call it something like the ‘Financial Conduct Authority’. It’s only a suggestion after a couple of G&T’s.

  8. Isn’t the CAB a charity so why isn’t the Charity Commission looking into this?

  9. I didn’t come into this business to teach the general public, at large, how to use their money, so they wouldn’t need to use my services. I came into it to make a living by helping responsible people that wanted to look after themselves and their families. Financial Advisers shouldn’t be paying for the public’s education, at all; that is the job of the state, otherwise bricklayers and plumbers should be made to pay for free classes for the people to learn how to build their own extensions. The whole idea was preposterous from the get-go. However, people don’t care about financial advisers because they think we are all rich and the government doesn’t care because we are not about to hit the streets protesting and making a nuisance of ourselves. That’s the only way to get things done in this country. Negotiation and pleading doesn’t work; only force and you all know it.
    No IFA trade body has ever thought to organise anything meaningful and never will, so we just have to lump it.

  10. I will echo Mark Garniers, comment the other day, RE-: “feeding frenzy”……… there is a “feeding frenzy” on the financial services industry, and this has many layers, which in turn reduces, competition, innovation and access, the amount I pay, or levied, to fund Pension Wise is, by comparison very small, however this is at the end of the day compulsory, and another very bitter pill to swallow, this is exacerbated by the misuse of funds and personnel.

  11. “N.B. There is also a worrying sense of mission creep surrounding Pension Wise. Citizens Advice is now proactively contacting businesses offering their services, for example.”
    So, Pension Wise must not be promoted locally? Near to my delivery centre is an employer laying off a significant number of staff, many of whom are over 55. Would it be better for them to see a Pension Wise Guidance Specialist and be warned of the pitfalls (and advantages of all the options available) or perhaps to cash in their penion fund(s) as a knee jerk reaction to redundancy? I hope this is seen as a rhetorical question!!

  12. Advisers are simply too expensive for a significant number of people. There needs to be something for those who are less financially sophisticated – and IFAs have priced themselves out of consideration. Pension Wise isn’t perfect, but it’s much better than nothing.

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