Yes, it did seem too good to be true, didn't it? As from next April, every new pensioner over 55 going was to get a free face-to-face consultation with an expert who would advise him on how to deploy his newly-liberated pension funds. And if any of us quibbled at the time with the idea that a government budget of £25 million wouldn't be likely to go far among the estimated 300,000 DC members who sign off the workforce every year, today we got our answer.
This morning's government declaration about the future of pensions guidance confirms that the guidance won't be coming from providers, which many had feared would see unsuitable investments recommended. Instead it will come through independent organisations, paid for by a levy on regulated financial firms. Oh, and it won't necessarily be face-to-face, as first the Chancellor indicated – it might be online or over the phone instead.
"We're going to work with people like the Citizens Advice Bureau, with Age UK and others to make sure people get the best possible guidance and that this is genuinely impartial," Mr Osborne told the BBC. He might also have mentioned that the Pensions Advisory Service and the Money Advice Service will be involved. So that doesn't sound like much of the consultation business will be coming from traditional professional advisers, then. More like the Whitehall mob and a handful of charities and quangos.
Tom McPhail at Hargreaves Lansdown didn't waste much time in calling the new measures "pretty superficial". But Derek Bradley, CEO of Panacea Adviser, took issue with the Chancellor's other statement, to the effect that advisory firms will also have to pay towards the provision of consumer guidance following the Government’s pension reforms.
“Paying for pension guidance for consumers would surely be a good use of the regulatory fines the FCA brings in, especially given that the bumper ones issued to banks and their like are no longer used to reduce the regulatory cost burden. It makes perfect sense to make the ‘bad boys’ of financial services reduce the costs of those that are ‘good’ rather than hit honest advisory firms with another levy in order to cover, what is likely to be, significant costs and expense to provide this service."
"An awful lot of guidance could be delivered for £135,855,700 – the amount raised in fines by the FCA just this year – and considering most of the fines are currently used to fund projects and schemes outside our industry, perhaps some small part of that amount could now be used to fund this guidance project rather than heaping further burden onto the advisory profession.”