Posted: 21st May 2018
On 10th May 2018, the Financial Guidance Bill received Royal Assent. In June last year, the government outlined a commitment to make financial guidance accessible to all and announced its intention to table a Financial Guidance and Claims Bill.
The act allows for the merger of the existing services provided by Pension Wise, The Pensions Advisory Service (TPAS) and the Money Advice Service (MAS). The objective is to create a clear, single financial guidance body, expected to launch at some point this year.
The body’s aim is to ensure savers are able to access free and impartial pensions and money guidance, as well as debt advice and they are able to access high quality claims handling services by strengthening regulation of claims management companies.
It also provides for the ministers to separately introduce a ban on cold calling for pensions, which will limit the statutory right to transfer and tighten scheme registration rules, designed to reduce the number of transfers to illegitimate schemes.
The Financial Guidance and Claims Bill key features are:
- The creation of a signal financial guidance body (formal name yet to be determined)
- Advice will be taken away from the body (within 12 months of inauguration) on the establishment of a ‘debt respite scheme’ i.e. the breathing space scheme which is currently being developed by HM Treasury (HMT). HMT is likely to publish further details of the breathing space scheme and how it works later in the year
- CMCs are impacted by an interim restriction on PPI claims charges before the transfer of regulation to FCA. HMT is consulting on the draft statutory instruments which give effect to this
- The interim PPI fee cap applicable to the amount charged for regulated services provided in connection with PPI is 20% of the amount recovered for the claimant in satisfaction of the claim. Where nothing is recovered, whether a claim has been made or concluded the fee cap is zero
- Encourage providers to help people to take guidance before withdrawing or transferring their pension
- Ban on pension cold calling (unless there us formal consent), implemented by the ICO. The FCA are yet to publish their regulations with relation to pension cold calling
Regulatory next steps
Following agreement by both Houses on the text of the Bill, it received Royal Assent on 10 May. The Bill is now an Act of Parliament (law).
Consideration for firms
The new Act puts the onus on trustees and pension providers to make sure individuals receive appropriate pensions guidance. Firms will likely to be considering their existing sales lifecycle to ensure they can implement and train staff with the new requirements.
At this stage, the finer details of the Act are yet to announced and will be consulted on in further detail.