In a letter sent to the chancellor of the exchequer George Osborne and Financial Conduct Authority boss Martin Wheatley, the ABI outlined an ‘action plan’ designed to give those customers who are unable or unwilling to access advice the freedom to withdraw funds from their pension pots.
The association wants to make it easier for providers to carry out customers’ wishes without the fear of redress or retrospective regulatory action where the correct steps have been followed.
‘Customer control’
The ABI proposed a ‘customer control’ mechanism which would remove the legal requirement for savers with a guaranteed annuity rate valued at £30,000 or more to pay an FCA-authorised adviser for financial advice. This legislative requirement was introduced by the Government on the eve of the pension reforms.
Instead savers would be warned about the risks of giving up their ‘safeguarded’ benefit or taking certain actions with their pensions through a guidance session delivered by Pension Wise or the Pensions Advisory Service.
"It is clear that implementing the law and regulatory requirements as they currently stand is not enough to ensure the benefits of the reforms can be universally felt"
“We believe this would provide greater flexibility for customers and at the same time reduce the scope for people making uninformed decisions,” said the ABI chairman, Paul Evans, and director general, Huw Evans, in a joint letter.
“While the vast majority of customers so far have successfully exercised their choices without complaint, it is clear that implementing the law and regulatory requirements as they currently stand is not enough to ensure the benefits of the reforms can be universally felt.”
The two ABI chiefs said a ‘joint taskforce’ urgently needs to be set up between the Government, regulators, providers and advisers to “work through the outstanding issues and deal decisively with them”.
The action plan also urged the FCA to clarify which products and circumstances need advice, and implored the financial watchdog to re-examine the advice boundary to establish whether it is suitable for the majority of customers using the new pension freedoms.
Joined up approach
“The ABI and its members remain completely committed to making the pension reforms a success so customers can make the most of the pension freedoms. But it is clear this cannot happen fully without a decisive and joined up approach to the implementation challenges that have arisen.”
“If the proposals in this action plan are taken forward, we are confident customers will be able to enjoy the freedoms in a suitably regulated environment.”
Last week, the ABI attacked Osborne after he announced a consultation on pension exit fees.
