Whilst the liberalisation of pensions is to be welcomed, the Chancellor’s plans to provide guidance to the masses is a disaster waiting to happen.
£30m pounds per year has been ear-marked as the amount necessary to pay for an army of ‘independent’ advisors who will guide consumers on where best to place their life savings. This is the money they have worked hard to accumulate and will rely upon to keep them in their old age. It is also hoped to be the Government’s buffer between the cost of keeping an aging population and the shortfall in the tax revenues required.
However, what ordinary people may not know is that they can no more rely upon advice to invest than they might rely upon a gambling addict to predict where the ball will land on a roulette wheel. The ‘independent’ advisors may not have links to investment firms, but they will have an agenda, an agenda that starts with a number of presumptions. They will be unlikely to advise consumers to only place their funds in vehicles that are 100% safe (government guaranteed) and they will couch their advice heavily with disclaimers to protect themselves when the inevitable happens. But happen it will, and despite the disclaimers there will be compensation claims for advice given that leads to consumers losing their savings. £30m is not only inadequate to fund the logistics of providing this army of advisors, it won’t even scratch the surface of the claims that will follow.
Needless to say, the politicians who dreamt up this scheme have already begun to distance themselves from the detail by passing it to the Treasury to implement who have dumped it on the FCA to manage. How quickly can a hot potato be passed?
And where will the £30m, or whatever sum is the reality, come from? Increased charges!
And how will they attempt to keep a lid on these charges? Automate the advice!
So all that guff about knowing your client and fully understanding their needs and circumstances will not apply to the masses who are suddenly presented with more money then they’ve ever seen and which they’ve saved all their working lives to accumulate. Let’s see now, a Lamborghini, William Hills, or a dabble in hedge funds?
The only thing that separates consumers and their life savings from the disastrous advice that will dished out by these advisors is the FCA. This is the organisation talks the talk about protecting consumers, makes outrageous and unprofessional pronouncements, fails to act when savers need them and walks the walk very quickly away from any responsibility when it all goes pear-shaped.
The liberalisation will go ahead so all we can do is unite behind the call for reform of the FCA, reform that amongst other things, would ensure that before any speculative investments are even discussed, government guaranteed vehicles are fully explored and utilised. Premium Bonds and bank savings accounts may not provide growth, but they do provide the basic security that should be at the core of investment strategies. Beyond that, savers need to be made fully aware that they are gambling and need to weigh up the risk of losing their stake in just the same way as they would in a casino.
They don’t need the spin, just the facts.
Please sign the government epetition on the following link and pass it on to everyone you know.