Draft amendments to the Financial Guidance and Claims Bill would place a strengthened requirement on providers to emphasise the availability of free and impartial advice.
The Bill will also enable a ban on pension cold calling and unsolicited financial promotions,
The amendment mandates the strengthening of the emphasis on free and impartial guidance from the new public financial guidance body, by requiring pension providers to check their customers have received guidance or have explicitly chosen to opt out of receiving such guidance. The measure is designed to stop retirees defaulting into the drawdown solution of their accumulation provider, to prevent a rerun of the pre-freedoms annuity market that saw millions default into poor value products with the home provider. But the extra requirement has been criticised by some industry players as likely to lead to duplication of communication with customers.
Under the new amendment The Secretary of State will have to either bring a ban on cold calling into effect by June this year or come to parliament to explain why it has not been done.
Meanwhile the FCA has recently announced a rethink on its plans to downgrade its register of authorised advisers, following concerns the public may not be able to easily verify the credentials of someone offering advice or guidance on savings and investments.
Hargreaves Lansdown head of policy Tom McPhail says: “Investors need help planning their retirement, but they also need to be protected from those who may not have their best interests at heart. The challenge for the new public guidance body will be to work with legitimate pensions companies which are known and trusted by their customers, without duplicating the valuable services these companies already provide.”
Aegon head of pensions Kate Smith says: “Growing at an exponential rate, pension scams have been a menace for years. At last the government has taken some action to tackle pensions fraud that has brought misery to thousands and cost people tens of millions of pounds every year. Even when it’s in place, people will still need to protect themselves from fraudsters based overseas, not affected by the ban, or others who simply flout it.
“Introducing a ban offers a degree of protection, but on its own won’t be enough. The government needs to tell people about it by running public awareness campaigns. Without this, people may not know of the ban and the fact that unsolicited approaches are illegal from June.
“The good news is that HMRC is already trawling its pension scheme database getting ready to wield its new powers to deregister illegitimate schemes from April.”