ICAS response to Public Financial Guidance consultation

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The ICAS Pensions Committee has responded to the HM Treasury Public Financial Guidance Consultation (October 2015).

18 December 2015

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Key points

We believe the concurrent reviews of public financial guidance and the provision of independent financial advice are timely. We acknowledge that the reviews are broad in scope; however, with the pensions freedoms recently implemented, these reviews are particularly welcome.

The focus of our response is on the provision of the pension guidance guarantee but we do comment more widely on the provision of public financial guidance, including debt guidance. In particular, we believe that:

  • There is a need to restructure financial guidance services under a single brand which sign-posts consumers to the specialist support they require and to relevant third parties, where appropriate. With regard to pension guidance, this will be accessed far more frequently than independent financial advice and therefore must be of a consistently high standard.
  • In order to meet future demand which will be driven not only by the freedom and choice reforms but also by auto-enrolment, we believe that ‘robo’ guidance will need to become an important means of delivering pension guidance.
  • At present the pension guidance guarantee is limited to people aged 55 and over with defined contribution (DC) pension pots. We believe that this needs to be extended to cover defined benefit (DB) pots and possibly to take into account other aspects of a person’s financial circumstances. The guarantee should also be extended to provide guidance to those that wish it at the beginning of their working life and for those at the mid-career stage. The recent announcement about the launch of a second hand annuity market in April 2017 may mean that pension guidance services need to be further extended to take this into account.
  • The freedom and choice reforms mean that the tax implications of withdrawing pension savings need to be understood by many more people. This is an area where we believe the government should ensure that consumers have access to information or advice, as appropriate, on the tax implications of decisions about pensions.
  • In order to address, the ‘advice gap’, consideration should be given to extending the definition of guidance to a point where it merely falls short of recommending a particular pension decumulation product.

Now that major reforms to our pensions system have been implemented, we believe it is the appropriate time for the government to consider setting up an independent pensions/retirement savings commission as a standing advisory body which seeks to achieve long-term stability for the UK pensions system and cross-party consensus. Long-term stability in pensions’ policy is relevant to the provision of guidance and independent financial advice as it would help to build consumer confidence in these services.


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