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Pension Wise nudges for all

7 months ago

Back in May I talked about the FCA’s proposal to get more people using Pension Wise guidance before they access their pension. My point then was that the timing of the “nudge” was all wrong – when an individual contacts their provider to access their pension, they’ve already made their mind up what they want to do.

Don’t get me wrong – the idea of getting those who are unwilling or unable to pay for advice to take guidance before they access their pensions is sound. There can be a real benefit for this cohort, and many cases will result in better outcomes.

We now have the policy statement from the FCA, and the final rules that will come into force from 1 June 2022.

Despite half of the responses making the same point that the nudge is too late in the customer journey, nothing has changed. The FCA’s view is that their hands are tied by the Financial Guidance and Claims Act 2018 which requires the nudge to be part of the application process.

What will be of most concern to advisers, is that there is no relaxation of the rules when it comes to your clients.

This leaves us in the frankly bizarre situation, that even when a provider knows a client has received full, regulated advice about the decision to take benefits, they still must nudge that client to Pension Wise. And this isn’t just a “by-the-way, you’re still entitled to free guidance with Pension Wise if you like”; the provider has to explain that the guidance is free and that its purpose is to help the client make informed decisions, and then they must offer to make the client an appointment with “an independent pensions specialist”. Providers are not allowed to undermine Pension Wise in any way, so any saying that advice is better than guidance, or it’s not needed if advice has been taken, could get themselves in hot water.

The FCA acknowledged the views that there should be a general exemption for advised clients but believes the guidance may still be of benefit. I’m sure some of you may be of a different opinion.

There is also a nudge trigger around transfers for the over 50s. The rules state that providers can assume anyone transferring over the age of 50 is doing so for the purpose of accessing benefits unless they know otherwise. So you may find providers start asking whether that is indeed the intention of the transfer, or you may want to offer that information in order to avoid the need for the nudge.

Once the provider has nudged your client to guidance, they can state they have had regulated advice and therefore wish to opt out and skip the actual appointment making bit to access their benefits.

A bit of good news to end on is that the idea of a waiting period for those that opt out has been dropped. So you can expect your clients to be offered the guidance, but if they choose to opt out based on the fact they’ve received your advice, then they shouldn’t suffer further delays.

This article was previously published by Sipps Professional

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Lisa Webster
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Lisa Webster

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Senior Technical Consultant

Lisa is an Economics graduate who has been in the financial services industry since 2003. Prior to joining AJ Bell in 2014 she spent nine years working in senior technical and consultancy roles at a major SIPP and SSAS provider. Lisa is part of our Technical Team, responsible for providing regulatory and technical analysis to the business and outside world. She is also a regular speaker at adviser events.

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