Speaking at a televised Corporate Adviser/Scottish Widows debate, Focus on Pension Freedoms earlier this month, Geale said the second line of defence requirements were not greatly different from existing consumer protection processes. He said the FCA had opted not to give definitive scripts for the second line of defence as they were unengaging and frequently ignored.
Talbot and Muir head of technical support Claire Trott said her firm, a Ssas and Sipp provider, would have to give risk warnings in paper form because of the regulatory risk of allowing unqualified staff to engage in guidance on the phone.
FCA senior policy adviser David Geale said: “There are a series of risks that come with these freedoms. We have looked to ensure people have the information they need. But firms and providers need to stick behind what they say. If they say things to customers they should take responsibility for that. This debate seems to get caught up in what people are asking for is the ability to give advice without liability, and I don’t think that should happen. What should happen is that advisers and providers have the space and the ability to talk to people about the decisions they are making and they can do that quite easily without giving advice. And if people need advice then they should take advice.
“I think there is a danger with set scripts. One that you miss something, and secondly that people will switch off. What you want is engagement, and the more you script it, the more they will ignore it. How many of us have scrolled through when we have bought a song on iTunes? All the risk warnings are irrelevant because you don’t read it. It’s the same with general insurance – how many of us listen to the three minute risk warning before we buy?”
Trott said: “We are not that comfortable with unqualified people having these conversations with people over the phone. So it will have to be paper-based. Either way, it will have to be given in writing, in a structured, regulated way. And if they have been to Pension Wise and spoken to a real person, it is likely they will be less bothered to read it.
Scottish Widows head of industry development Peter Glancy said: “The freedoms are going to change the dynamic of the relationship between employers and their employees, particularly in the decade around retirement. Some employees who are more well-informed, that employers want to keep, may want to retire earlier. Other employees who are less skilled who the employer would like to help out of the workplace at say 60 or 65, they may want to stay longer. So employers are going to have to think about their HR policy and about the benefits, including the pension scheme and what sorts of freedoms the administrators of the scheme are going to be able to offer. So the employer will have to take a step back, reforecast employees’ behaviours and look at their benefits package again.”