Rather than try to compete with the shadow Chief Secretary’s negative attitude towards the Bill and his extended romp through it, I feel it is my role—my position is somewhat more humble than his—to stick to two or three brief points and ask the Government and him to think about them.
Although I applaud the Bill’s pension clauses, I think that two particular issues should be addressed in addition to what was said in the Budget statement. The first relates to the provision of advice and information to people who choose an alternative to the previous system whereby, for good and bad, the decision was handled by an insurance company through the annuity system. Something has been published about Government money being spent on helping to provide advice or information, but my fear is that that will turn out to be a call centre somewhere, with people who may be trained only in a limited way having to advise people on the biggest decision of their lives and finding it very difficult to do so.
Regulations were brought in by the Financial Services Authority for the smaller independent financial advisers who, for better or for worse, provided such a function for people retiring with small pension pots. A very open policy by Adair Turner and Hector Sants, part of the previous administration at the FSA, in the form of new regulations relating to the retail distribution review and the disclosure fees, has effectively eradicated the very low-level IFAs—those dealing with very small pension pots—simply because it was impossible for them to charge enough money to be able to give proper advice. I understand that, because it is just economics, but my fear is that no one or no company has adequately replaced that kind of advice, let alone in relation to what the Government are about to do.
I hope that the Exchequer Secretary and his colleagues will give that some attention. I know some money has been allocated, but for most people it is the most serious decision they will ever take, except possibly when buying a house. There must be a mechanism, whether private or Government-funded, to provide good advice. For wealthier people, there is a very sophisticated wealth management business—IFAs are very good, and I am sure that different firms around the country do an excellent job—but given that the average pension pot is probably about £20,000 to £25,000, it is a very important decision for people who have saved into it all their lives. A lot of thought must go into how such people are informed, although I accept that, for regulatory reasons, there is a big difference between information and advice.