The Pensions Advisory Service has seen a 71 per cent increase in enquiries since the introduction of freedom and choice in April last year, showing the need for accessible guidance.
The increase was highlighted in a report conducted by financial services communication specialist Team Spirit on behalf of TPAS, which focused on the period between April 2015 and February 2016, following the implementation of freedom and choice.
The service handled more than 180,000 enquiries over the period across its helpline, online chat services and written questions.
One of the big things is making sure people know what they don’t know
Michelle Cracknell, TPAS
Managing the difference between what is guidance and what is advice is a sensitive area for many in the pensions industry, as companies are wary of providing what could be seen as advice and therefore becoming liable should anything go wrong.
However, Michelle Cracknell, chief executive of TPAS, said the service was able to go further with guidance due to the fact TPAS does not sell products and is therefore at less risk of being conflicted.
“We can take it closer to the line because we have no bias,” she said.
Regulated advice is suggested for around half of those who contact TPAS. “One of the big things is making sure people know what they don’t know,” Cracknell said. “I think we’ve got a pretty good balance in providing personalised guidance so customers know what the next steps [are].”
Pressure on private sector
The number of customers seeking guidance rose sharply following April last year. Tom McPhail, head of pensions research at investment platform provider Hargreaves Lansdowne, reported a 45 per cent increase in call volumes in the two months following the introduction of freedom and choice compared with the same period the previous year. The volume of emails and letters was up 76 per cent.
He added providers had borne the bulk of the demand for guidance since the changes were brought in.
“The impact on the industry dwarfs the kind of capacity and numbers experienced by TPAS,” he said, adding that the industry’s focus has been on how to provide guidance and advice much more than on product innovation.
“Most of the work has been around the engagement with the customer and developing new ways of delivering information.”
The Financial Conduct Authority announced plans in its 2016/17 business plan to “simplify and clarify the regulation of financial guidance” over the next business year.
Jonathan Watts-Lay, director at financial education provider Wealth at Work, said: “What they’re trying to do is trying to get to the point where advice in the regulated sense will only apply where someone gets a personal recommendation. At the moment we have a situation where the FCA has gone down the route of saying if someone feels they have received advice, they have.”
