Royal London is calling for urgent reform to the financial advice market in order to avoid a ‘perfect storm’ and to protect consumers following the introduction of the Government’s pension reforms in April 2015. There is a risk of massive consumer detriment in the absence of urgent action to secure much greater access to financial advice.
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Perfect storm’ of Government’s pension reforms and Retail Distribution Review risks massive detriment for around 260,000 people
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Government pension reforms hugely increase need for affordable impartial advice to allow consumers to make informed decisions about pension provision
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Report commissioned by Royal London argues that a number of recent regulatory reforms all potentially limit the access of “middle market” retirees to financial advice
As the Pension Schemes Bill enters the House of Lords, Royal London, the UK’s largest mutual life, investment and pensions company is asking Peers to strengthen the Bill. Royal London believes that, without appropriate impartial advice, there is a far greater risk that consumers use their newfound freedom to buy unsuitable products like income drawdown on a non-advised basis or “sleepwalk” into poor value products offered by their pension provider.
A report by Cazalet Consulting, commissioned by Royal London, argues that the Retail Distribution Review (RDR), the subsequent ban on consultancy charging and, for many schemes, the lack of relationship between scheme adviser and members, all conspire to limit “middle market” retirees’ access to affordable financial advice.
Royal London believes the need for impartial advice goes much further than the Government’s proposed ‘Guidance Guarantee’. The start of the Bill’s legislative scrutiny in the House of Lords gives an opportunity for Peers from across the political spectrum to put pressure on the Government to bring forward amendments setting out detailed proposals on how the advice market can be improved to meet the real needs of consumers most effectively.
Phil Loney, Group Chief Executive at Royal London said:
‘With less than four months to go we can see a ‘perfect storm’ brewing. Unless action is taken now to prevent the combination of a dramatic fall in the availability of impartial advice with the introduction of new found pensions freedoms the result could be massively detrimental to the consumer. This advice must be impartial and not simply a vehicle for the incumbent pension provider to sell their own products. Pensions Minister, Steve Webb and the Financial Conduct Authority have previously indicated their support for introducing a more affordable advice model – but over the past eight months nothing of consequence has happened. As the Pension Schemes Bill enters the House of Lords, this is the last chance to ensure these reforms deliver on the Budget rhetoric.’
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