For the last decade, the FSA, and latterly its reincarnation as the FCA, have lambasted pension providers and the financial advisers that recommend their products. The FCA have criticised their work and insinuated that the IFAs and providers are ripping consumers off and need huge amounts of regulation to prevent them from essentially robbing the consumers.
If this stereotype were true, then you would think that both the providers and the IFA sectors would be leaping for joy at the latest set of pension reforms. Having had a retiree audience with limited options, the FCA was able to police it relatively easily. Now that retirees are free to access their money, they are available to be marketed any type of financial product from the restricted to the seriously scamming types. And the FCA would find it far harder to control the offering as the customer is being given the freedom to spend their pension savings any way they wish to.
And yet the pages of the trade magazines are full of criticism of the reforms from those who could actually be expected to benefit from them. While the politicians are competing to allow more and more freedom for pensioners, it is the pension providers and IFAs who are sounding the warning notes. They are the ones trying to make the general public see the dangers involved in accessing one’s entire pension savings at the point of retirement. They are thinking beyond the excitement of pensioners at accessing lump sums easily in the early years of their retirement and considering what the position will be further down the road when the pensioner is older and the pension pot they saved has been drained dry.
It is the providers and IFAs who are acting as the consumers’ champion and the government and regulators who seem to be determined to increase the risk. The political sound bites of ‘Pension Freedom’ and that people ‘know best what to do with their own money’ trumps the need to make sure that elderly people, unused to making investment decisions, do not make bad gambles with their money or be exposed to the dangers of conmen and charlatans.
After years of excoriating the pensions sector as being untrustworthy and of failing their clients, the FCA and certain members of the Government really owe the providers and IFAs an apology. Unlike the politicians who are using the pensioners’ future as electoral cannon fodder, it is the pension providers and the financial advisers working in the retirement space that are the ones putting the needs of the consumer ahead of their own potential opportunities.
Google Plus: TomMurray
What do you think?
Let us know in the comments below!