Posted on: 13th Feb 2015
Independent Financial Advisers are growing increasingly worried about the Government’s new flagship guidance service, which will be partially funded by the UK’s IFA community.
Having already been hit with news that 12% of the anticipated £35 million bill to fundWise will be footed by existing advisers, the industry is now reeling following the announcement that extra costs incurred will likewise be recouped from the industry.
As such, the likelihood of Pension Wise exceeding the £35 million and that of the government helping itself to more IFA contributions has been likened to a prospective “open cheque book” policy that’s likely to be used and abused with highly costly consequences.
Right now, the industry as a whole does not seem to have a great deal of confidence in the government’s ability to stay within its estimate due to those leading the campaign having insufficient knowledge of the subject.
“My biggest concern is the open cheque book nature of the [IFA guidance] levy,” commented Pete Matthew of Jacksons Wealth Management.
“I do not have a massive amount of confidence this will deliver value for money, given those delivering the guidance will not havequalifications.”
Others have lashed out at the announcement, stating that it is unfair to warn the UK’s IFAs of a possible levy increase without putting an exact figure or upper-limit to it.
For the 2015-2016 pensions year, the government will collect upward of £4 million from the IFA community as a means by which to partially fund its ownadvisory services. And while this 12% levy has already sparked outrage across the industry, it is if nothing else a far cry from the 30% proposed when the idea was first floated by the FCA. Suffice to say however, industry players are not in any way viewing the backtrack to 12% as some kind of victory.
This month, Pension Wise will be rolled out in trial form and online applications have already begun.
Opinions differ as to whether or not the project will in fact bear any real fruit, as L&G once trialled a very similar program which resulted in only 2.5% of those eligible actually taking up the advice on offer. Created to help those approachingmake the most appropriate and informed decisions with regard to their own pension options and finances in general, the government hopes to steer more seniors in the direction of safe and beneficial schemes.
As far as the IFA is concerned however, the whole idea represents little more than a slap in the face to those already doing their utmost to steer retirees in the right direction.
By effectively being charged for handing out independent advice that’s swayed by neither corporate nor governmental influence, IFAs understandably feel more than a little short-changed for the whole deal.
And now that it’s been announced that the industry could in fact end up paying a great deal more than originally expected and with no forewarning of such, the backlash is only likely to intensify as the program rolls out.