Pension Bodies Providing “Guidance” Rather Than “Advice” Are To Be Reformed

Pensions Wise and Pensions Advisory Service To Go

16.03.2016

Kate Rawlings, Press Officer | 0114 274 4238

Further consultation was announced today by the Treasury in its Public Financial Guidance Review.

Its aim is to ensure all consumers can access the help they need to make effective financial decisions throughout their lives and is consulting on changes to this.

It recognises that there are currently both gaps in the free financial guidance available to consumers and duplication of what is available within Money Advice Service, The Pensions Advisory Service and Pension Wise. This is confusing for consumers.

As decisions on pensions are some of the most significant that individuals make and yet it is a subject that most are least informed about that the government is right to accept that it needs to continue to provide pensions guidance directly and as simply as possible.

The proposal is for there to be one new pension guidance body to replace the Money Advice Service, and merge the functions of TPAS and Pension Wise so consumers can get all their pensions questions answered in one place.

Its other jobs are be identifying gaps in the financial guidance market, providing a reduced down money guidance body, commissioning targeted debt advice, money guidance and financial capability projects or services to fill any gaps identified and providing funding for this.

A partnership agreement is to sit between the pensions guidance body and the money guidance body so consumers who need broader financial guidance on both pensions and money issues can be directed to the right places.

Expert Opinion
Interestingly the new pensions guidance body and the new money guidance body will be funded by levies on the financial services and pensions sectors, so it will be heavily scrutinised.

Given its wide remit, it is likely to face some substantial challenges from day 1 – not least in terms of explaining to individuals the differences between guidance, financial advice and regulated financial advice that is based on a personal recommendation as proposed by the Financial Advice Market Review. I have to confess I’m not sure myself where robo advice would sit within these or whether this would form a further type of financial advice/guidance.

The new body may be needed less if the Government introduces a pensions advice allowance so people before the age of 55 can withdraw £500 tax free from their defined contribution pension pot to redeem against the cost of financial advice- a Budget proposal.
Penny Cogher, Partner