In June last year, the government outlined a commitment to make financial guidance accessible to all, especially given the millions of new savers through automatic enrolment (AE), and announced its intention to table a Financial Guidance and Claims Bill.
The act allows for the merger of the existing services provided by Pension Wise, The Pensions Advisory Service and Money Advice Service to create a clear, single financial guidance body, expected to be launched later this year.
The body's aim is to ensure savers are able to access free and impartial pensions and money guidance, as well as debt advice, and that they are able to access high-quality claims-handling services by strengthening the regulation of claims management companies.
It also provides for the minister to separately introduce a ban on cold-calling for pensions, which will limit the statutory right to transfer and tighten scheme registration rules, designed to reduce the number of transfers to illegitimate schemes.
In January, Guy Opperman explained the bill was good news for the whole financial services industry, as it will lead to an important place for qualified, regulated advisers to offer free, high quality, impartial debt, pensions and money guidance before consumers decide whether it is helpful to have additional support.
In February, swift action to ban cold-calling was also promised in a bid to stem the flow of pension savers being lured into scams. In a joint paper, the Department for Work and Pensions (DWP) and HM Treasury confirmed the two bodies would "continue to work swiftly" to implement the much-called for ban, after it was last year revealed £43m had been lost to scams since 2014.
The ban will apply to phone calls, text messages, e-mails and other forms of direct communication from firms an individual does not already have a connection with the aim of reducing the scope for pensions fraud, and to reassure members that their pension pots are in safe hands with reputable pension providers.
Aegon head of pensions Kate Smith said: "Along with establishing the new single financial guidance body, the new act gives individuals greater protection against pension scams and puts a responsibility on trustees and pension providers to make sure that individuals receive appropriate pension guidance or have opt-out of guidance before accessing their pension.
While she welcomed the cold-calling ban, she warned it would not provide full protection for savers, and it needs to be coupled with effective communication to potential victims.
"Growing at an exponential rate, pension scams have been a menace for years," she continued. "The pensions cold-calling ban will do more to protect savers, but for some unfortunately it's been far too late in the day. The sad fact is that the ban is unlikely to give anywhere near 100% protection from scammers who will simply ignore the law, while it gives no protection from scammers based overseas."
Barnett Waddingham self-invested technical specialist James Jones-Tinsley said combining the three existing services into one single body is both welcome and sensible "as it will provide a ‘one-stop shop' to consumers for their guidance requirements".
"However, it is imperative that the quality inherent within the existing three services is not diluted or lost as a result of the consolidation exercise… Clarity surrounding the launch date of the new body is also vital, as providers will have to amend their literature and processes to incorporate the new body, which will be a timely exercise," he added.
Speaking on the pension cold-calling ban, he said it was welcome but "long overdue" and agreed with Smith.
"The cold-calling ban itself will not be a complete panacea to avoiding scams, but is more than we have at present, and will need to be clearly communicated to consumers, once the act is on the Statute Books," he said.
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