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).