Out-Law / Your Daily Need-To-Know

UK government agrees plans for single financial guidance body

Out-Law News | 13 Oct 2016 | 12:58 pm | 1 min. read

UK ministers have agreed plans to replace the existing government-sponsored financial guidance services with a single body; to be responsible for delivering debt advice, money and pensions guidance.

At the Budget in March, the government announced its intention to replace the existing services with two public-facing bodies: a streamlined, money guidance body to replace the Money Advice Service (MAS); and a single pension guidance body combining the functions of the Pensions Advisory Service (TPAS) and Pension Wise.

It will now further streamline the existing services in response to concerns raised by industry and finance groups, which had suggested that a single body would provide a more effective service and be less confusing for consumers.

Richard Harrington, the pensions minister, said that a single guidance body would "be more efficient and will help consumers make the right financial decisions".

"We are committed to ensuring people can access the best free and impartial financial guidance possible," he said.

Simon Kirby, economic secretary to the Treasury, said that the government "wants to give ordinary people more control over their lives, and that includes their financial security".

The government had intended to legislate for two new bodies as part of a planned Pension Schemes Bill, but now no longer intends to do so. Existing arrangements will continue for the time being, pending full consultation on the best design for a single money and pensions guidance body.

The Treasury is currently consulting on adopting a new definition of regulated financial advice; bringing it into line with that in the EU's Markets in Financial Instruments Directive (MiFID) which is based on a firm giving a customer a personal recommendation. The new definition was one of the recommendations of the recent Financial Advice Market Review (FAMR), and one of the reasons behind it was to address firms' reluctance to offer cheaper, less formal guidance products for fear of straying into regulated territory.

MAS is a free, independent service, established by statute, which provides advice on money and financial decisions to UK consumers; while TPAS performs a similar function in relation to pensions as well as providing Pension Wise guidance via telephone. Pension Wise was set up in 2015 to coincide with pension savers' new rights to access their savings more flexibly, and allows all savers to obtain free guidance at the point of retirement.