Chief executive Keith Richards said:
“Despite welcoming the principle of greater freedom and choice, the recent pension reforms are already throwing up a number of unintended consequences which need to be addressed,"
The PFS have highlighted that there have been some great examples of consumers benefitting from greater freedom, especially under professional advice, but changes need to be introduced to enable and encourage advice firms to increase access, including a ‘safe harbour’ for a qualified guidance review.
Prior to the pension reforms, the PFS proposed a voucher system and believe that this should be revisited as part of the government’s development of the new freedoms.
“Consumers must be given a lot more support with the decision-making process,” Richards continued, citing America and Australia as examples to illustrate where the consequences of similar reforms have precipitated a retrograde move away from greater freedom.
The PFS have also stated that it would be helpful to see more meaningful consumer data shared from Pension Wise. “The lower level of engagement against expectations is not an indication that it has failed, as feedback from consumers who have used it is positive,” suggested Richards, “but data should be shared to help inform debate and influence further decision making.”
The issue of insistent clients is another area where the society are calling for decisive clarification. As Richards explained: “Whilst the FCA is promoting the use of a three-step process to overcome the problem, it will not confirm whether or not it is acceptable for an adviser to facilitate transfers against suitable advice and the best interests of a client.
“The frustration over a process which forces a consumer to take advice when they don’t want it, must be addressed,” he continued, “especially when in the same breath the government and regulator say it is OK to then ignore it.
“Changes need to be implemented here to protect both the consumer and the profession alike, through the introduction of greater certainty around future treatment of retrospective reviews. It is wholly unacceptable to continue dodging the issue from both a consumer and adviser perspective.”
According to the PFS, the spiralling costs of regulation are also proving a barrier to the provision and maintenance of effective advice. Richards wrote to the chancellor in July about their impact and the risk that they will continue to drive firms from the regulated market, discourage new entrants and influence behaviors towards non-regulated activities.
“Such costs are restricting growth and innovation, which also contributes to the need for a review, given the inevitable direct and indirect consumer impact,” Richards concluded. “This unsustainable regulatory impact is neither balanced, nor in the best interests of either the public or the industry that serves them.”
