One plan in particular, recently unveiled in the Budget 2016 will have significant impact on all areas of the financial services sector. The Government will replace the current statutory financial guidance providers with a new model. The idea is to merge The Pensions Advisory Service (TPAS) and Pension Wise in order to remove all duplication across pension guidance services. It makes perfect sense to provide a one stop shop for all pensions guidance, rather than continuing with the current system of separating guidance relating to pensions freedom from all other pensions related queries.
Pension Wise launched ahead of pensions freedom to provide consumers with guidance that would help to unravel the complexities of options available to them. Since this guidance can only provide the basic information, it was recommended that clear signposts to fully regulated advice would be instrumental to its success, helping to avoid blurring the lines between the two. The same proviso will need to be part of the plans for its replacement.
The Money Advice Service (MAS) is also to be replaced. It was launched in 2011 to provide basic free-of-charge “guidance” on all personal finance issues. The very name and description of this service alone suggests that it is long overdue a radical overhaul. By combining the two words ‘money’ and ‘advice’ to describe what is meant to be understood as ‘guidance’ only, provides confused messaging to the consumer.
With additional weight added to the word guidance, MAS will be replaced with a new, slimmed-down money ‘guidance’ body, governed by a small independent board encompassing a CEO, senior executives and non-executives from relevant sectors, including the financial services sector.
The new bodies will continue to be funded by a levy on the financial services and pensions sectors, with both the Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) collecting the fees.
It will come as good news to the financial services sector, that the changes will incorporate a partnership agreement that will sit between the new pensions and money guidance bodies to ensure that consumers, who need broader financial plans, can be directed towards more in-depth, fully regulated financial advice.
The proposed changes will not come into full effect for at least two years and will of course need to be carefully considered. In the meantime, let’s just hope that any developments will be of additional benefit to the consumer and at the same time, not put any additional strain on financial advice firms running costs, or indeed negatively impact the already complex work involved in delivering fully regulated financial advice.