- Policymakers and providers alike agree that high quality financial guidance is important in helping drive better outcomes for consumers facing a range of often difficult and complex financial challenges and choices.
- The establishment of the single financial guidance body later this year will see guidance delivered through one body, offering convenience and creating a strategic approach to supporting consumers where needs and financial understanding are often interlinked.
- But, with increasing numbers of customers accessing their pension flexibly, particularly through non-advised routes, there is a concern that many individuals may not have fully understood the impact of some of their investment or withdrawal decisions, or fully considered risks such as longevity or tax rates when withdrawing cash lump sums.
- Whilst we may not see the impact of these potentially poor decisions for years or even decades to come, there is a view that action needs to be taken sooner rather than later to reduce the likelihood of poor consumer outcomes.
- As a result, the industry would like to work with policymakers and regulators to consider how more people could be prompted to use guidance, as a way of creating an additional safety net for consumers.
Prompting more people to use guidance
