Responding to the Government’s consultation on a new single financial guidance body, LV= says that the new body should be required to report on the consumer outcomes of guidance, as well as the number of people it refers to regulated financial advice at retirement. This should ensure consumers are being supported to make the right decisions.
This call follows research from LV= which found that just one in ten (12%) over 55s who aren’t yet retired are planning to use the Government’s free guidance service, Pension Wise, while nearly four in ten (37%) have never even heard of it. A similar percentage (41%) say they don’t plan to take regulated advice when they retire.
Major changes in the pensions market in recent years have made it even more important that people have access to guidance and advice to help them make the right decision at retirement. LV= believes there is a genuine risk of a ‘mis-buying’ crisis with people making critical decisions without support, but expanding the guidance body’s pensions remit to focus on helping consumers make active, informed decisions – as well as reporting on these outcomes – should help avoid this crisis.
Consumers who have used Pension Wise have given positive feedback but the real challenge is getting people to call and take advantage of the service. LV= wants impartial guidance to be the default option at retirement for those who haven’t taken advice and for the new body to report on the outcomes of this guidance. It also believes the body must actively promote financial advice where guidance identifies someone would benefit from it, and report on the number of referrals to advice. Introducing this accountability will ensure the body remains focused on helping consumers get the most out of their pension savings.
LV= is also calling for the single guidance body to focus on providing guidance for specific events, for example when someone buys a property or has a child, and prioritise helping people build financial resilience against the consequences of illness, unemployment, retirement and death. Currently only one in ten people have insurance that would protect them if they couldn’t work due to sickness or injury  but the new body has an opportunity to help ensure individuals and families have support when they need it most.
Philip Brown, Head of Policy at LV=, said: “We fully support the creation of a new single financial guidance body and believe this is a golden opportunity to tackle the issue of people retiring without support. There are many positive aspects of existing guidance services which should be retained, for example the Money Advice Service comparison tables and The Pensions Advisory Service’s dispute resolution service, but the new body’s remit could be expanded to help even more consumers.
“Requiring the body to focus on achieving quality outcomes from guidance, and report on the number of referrals to regulated advice, should ensure consumers have the help they need to make important financial decisions. Consumers genuinely value Government-backed guidance, particularly at key events such as retirement, and we expect the new body to provide the high quality, impartial guidance that UK individuals need.”