Financial guidance resources the Money Advice Service, The Pensions Advisory Service and Pension Wise will be replaced by a single body, the Treasury and the Department for Work and Pensions said yesterday.
The move comes after previous proposals for a two-body system involving a replacement for the MAS and a merger of TPAS and Pension Wise, first announced in this year's Budget, sparked industry concerns.
While TPAS and Pension Wise have been largely well received by the industry, the MAS has attracted criticism for its high costs, insufficient uptake, and even its name, which erroneously suggests it provides financial advice rather than guidance.
From a consumer perspective, having three organisations delivering different bits of pension guidance is mildly ludicrous
Tom Selby, AJ Bell
The Treasury and the DWP said that replacing the three services with a single body will ensure that consumers can find relevant information on one website, whatever the particulars of their financial situation.
According to the government, the previous consultation on a two-body system received responses that questioned the ability of the two organisations to work together effectively.
In a statement, pensions minister Richard Harrington said: “A single guidance body will be more efficient and will help consumers make the right financial decisions, and we are committed to ensuring people can access the best free and impartial financial guidance possible.”
The government plans to consult on the proposal before further details of the new service are confirmed.
A wise move
AJ Bell senior analyst Tom Selby said the difficulty of the situation merited the response from ministers.
“From a consumer perspective, having three organisations delivering different bits of pension guidance is mildly ludicrous, so having it all under one roof should make the process easier to navigate,” he said.
Given the amount already spent on advertising Pension Wise, Selby said he expects the new site to incorporate the information offered by the MAS, and the vital technical capabilities of TPAS, under the branding of Pension Wise.
He added: “TPAS is a vital service with a wealth of experience and knowledge that must be preserved. This merger should be about simplification for savers and removal of unnecessary duplication to bring down the industry levy, which is ultimately paid for by consumers through higher fees.”
Kate Smith, head of pensions at Aegon, echoed Selby’s comments, stressing that the MAS’s expertise in online delivery of guidance was another skill which must be included in the new proposition.
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But she also voiced wider concerns about the suitability of both the current and proposed services, when addressing a population in need of personal and regulated advice.
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“There is... a fundamental problem with guidance services in that most people want to be told what they should do and this requires formal financial advice,” she said.
She said that savers planning financial decisions such as opening bank accounts demonstrate far greater autonomy than those assessing their retirement provision.
“Just 14 per cent are happy deciding how much money they will need to meet their retirement goals. The Financial Advice Market Review is looking at ways of extending advice, but as yet there are no silver bullets to solving what is a complex problem.”
