Today’s comments by the Investment Management Association’s comments follow the FCA’s consultation on the service, which is known as the “guidance guarantee”.
The IMA said the standards for guidance outlined by the regulator had a “potentially significant part to play” in the pension reforms announced in this year’s Budget, but failed to highlight how the service would fit with regulated advice.
Director of public policy at the IMA, Jonathan Lipkin, said the representative body for asset managers in the UK “fully supported” the Government’s decision to allow people saving for retirement to have more flexibility in the way they take retirement income.
However, he added that guidance will not be a “one-off process” for many people: “We suggest the Government considers how the guidance service could be used to provide assistance through both the accumulation and retirement income phases.
“Alongside strong pension scheme governance and good default strategy design, guidance can help in what may often be a complex decision-making process.”
The IMA also said it would “not be unreasonable” for asset managers to contribute towards the funding of the service, provided the cost is proportionate to the benefits it brings.
Announced as part of the chancellor’s spring Budget in March this year, the guidance guarantee looks to ensure all consumers have access to advice before they begin taking their pension.
“Unfair on advisers”
Last week, the Association of Professional Financial Advisers said a proposed levy to pay for the guidance guarantee would be unfair on advisers and consumers.
APFA said it was concerned about the estimated £15m price tag of the levy, which could potentially cost advisers 5% of their total profits.
“Under the FCA’s proposals, a disproportionately large amount of the cost will be shouldered by financial advisers and passed on to consumers,” said APFA director general Chris Hannant.
“The FCA’s current plans are unfair on advisers, and ultimately, unfair on consumers. It’s vital that when finalising its levy the FCA uses a method that reflects the relative size of different sectors and the benefits they are likely to gain.
“We think a fairer method would be to allocate the levy on the basis of firms’ turnover, utilising information already held by the regulator. This will ensure that contributions are distributed proportionally and fairly across the industry.”
