This would take the place of the legislative requirement to pay for regulated advice by an FCA authorised adviser where customers have pension savings that have Guaranteed Annuity Rates and are valued at £30,000 or more.
The ABI has written to the Chancellor of the Exchequer and the CEO of the Financial Conduct Authority outlining the action plan to tackle "implementation challenges" with the new pension freedoms.
Instead, their customer control mechanism would be delivered through a specific guidance session by Pension Wise or the Pension Advisory Service, and enshrined in a protocol agreed with the FCA and the Financial Ombudsman Service.
Other key elements of the plan include the FCA conducting a broader review of the balance of responsibility between customers and providers in light of pension flexibility, and to set out clearly those products and circumstances where advice should be taken.
The ABI have urged the Treasury and providers to work with the FCA and Department for Work and Pensions to clarify the definition and valuation of safeguarded benefits, by a change in the law.
The ABI and its members also plan to start developing standardised language on products and charges to help customers consider their options, and to ensure clear, consistent communications to customers on the products and services available.
In a joint letter ABI Chairman Paul Evans and ABI Director General, Huw Evans said:
“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.
“This Action Plan proposes a solution to the problem of customers unable or unwilling to access advice in the circumstances set out in the law. We also request the urgent establishment of a joint taskforce between the Government, regulators, providers and advisors to work through the outstanding issues and deal decisively with them.
“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.”
