Government removes ‘auto guidance’ from Financial Guidance and Claims Bill
01 February 2018
The Government has removed an amendment to the Financial Guidance and Claims Bill which would have automatically enrolled people into guidance as they seek to access their pension pots or transfer benefits.
Pensions Expert reports that due to the amendment of the bill, providers will instead have to ask customers wanting to make use of the pension freedoms whether they have received ‘appropriate pensions guidance or appropriate independent financial advice’.
If neither guidance nor advice has been received, the provider will have to recommend obtaining guidance or advice.
Providers will also be required to ask the member if they wish to wait until receiving guidance or advice before accessing their pot or transferring, or proceed without it.
The Work and Pensions Committee had previously recommended mandatory guidance, while pensions minister Guy Opperman had highlighted the need “for people to receive a further nudge” towards guidance, during a recent debate in the House of Commons.
According to an article by Professional Adviser, Ros Altmann, the former pensions minister said:
"I am really disappointed the government seems to have bowed to industry pressure and proposes to weaken consumer protection for pension customers. By removing a clause introduced in the House of Lords, designed to protect consumers' pensions better, more people are at risk of losing their hard-earned savings in scams, frauds and unwise pension withdrawals.
The scrapped amendment would have seen people automatically enrolled into guidance if they were taking benefits under pension freedom or were transferring benefits. Instead, providers will now be tasked with asking customers whether they have received "appropriate pensions guidance or appropriate independent financial advice", whether they would like to wait to have some, or whether they would prefer to continue without any.
The government wants to water down the consumer protection and just require providers to tell people about the guidance, rather than make an appointment for them. Providers already have a duty to 'signpost' people.”