Alan Higham, Head of Retirement Insight at Fidelity Worldwide Investment, comments on the ABI’s position on the Guidance Guarantee: “Many people will see the ABI’s position that product providers have no role in delivering the Guidance Guarantee as positive for consumers. It recommends consumers are signposted to a 3rd party utility for impartial guidance; that will probably be The Pensions Advisory Services (TPAS).
“We can all see why it is hard for any provider to say that it is ‘impartial’ and the ABI position recognises this. But the reality is that whether they provide the Guidance Guarantee or not, most customers will need to engage with a provider to buy retirement income products. By not having providers playing their part in delivering a minimum standard of good quality guidance to help customers navigate the Budget freedoms, a huge void is created. It is simply not fair to ask TPAS to fill it on its own. Who sorts this out?
“TPAS is a wonderful organisation that helps around 10,000 each year with their retirement questions. That represents 2.5% of the people who buy retirement income products each year and less than 1% of those who consider buying such products.
“The questions left unanswered by the ABI announcement are:
1. What happens to the 99% who don’t go to TPAS?
2. Even if take up increases by 20 times to the 200,000 TPAS is planning for, what happens to the other 800,000 who need help?
3. Will their provider be allowed to give any guidance? It might say, we can’t be impartial but we can still give you honest expert guidance and let you decide. Should that be allowed to happen or must providers be banned from these conversations?
4. If providers do guide their customers, shouldn’t it be done to a high minimum standard that focusses on getting the customer to the right place?
5. If providers don’t give guidance but must refer to (say) TPAS, what is to stop pension fraud increasing on a massive scale as crooks call/text/mail people pretending to be TPAS?
“There is no doubt that providers as a whole cannot easily be trusted. Some providers do however provide excellent guidance and advice, not only at the point of retirement but in the years running up to retirement. Are these services to be declared illegal or to be tarnished in the public’s mind? Both would be unfair and risk giving very poor outcomes.
“We believe that providers can and should be encouraged to guide their customers to the right outcome. Being unable or unwilling to do that properly should be a badge of shame not honour. The FCA should learn lessons from its supervisory review of the retirement income market and ensure that providers use their privileged relationship to deliver their customers to the right place. Specifically it should create and endorse a set of minimum standards that should be met by all those providing help to customers at retirement.
“Fidelity plans to continue to provide its guidance service to its customers throughout their retirement savings journey and particularly when they seek to buy a retirement income product. We ensure that where people buy an annuity, it is sourced from the whole of the market, allows for medical conditions and is bought with the right features. Many people after receiving guidance decide to defer buying an annuity or take their pot in full. People with larger sums wishing to go into drawdown are also guided about the tax consequences and the importance of managing investment volatility. We see this result in people taking financial advice and making better decisions.
“We are very happy to support TPAS in its work and any refer any of our customers who would like to speak to someone outside of the firm either to their own financial adviser if they have one or to TPAS.
“But we will not wash our hands of our customers who ask for help in making decisions at retirement. Our customers can trust Fidelity to help them have a better retirement. After all, that is why a million people are saving with us.”
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