I thank the Minister for that useful clarification. Telephone guidance will be provided by the Pensions Advisory Service. The Minister described those as trusted brands. Certainly, CAB has a widespread reputation. TPAS has a good reputation among those who know about it. We have to recognise that most people will never have heard of TPAS. The reputation of MAS is a bit more mixed but, as the Minister said, it will work inside Government rather than provide guidance.
I take the point about trusted brands but I think it is more complicated than that. Citizens Advice does a very good job but historically has not undertaken this sort of guidance role in such a complex area. We must also be honest and bear in mind the pressure that Citizens Advice is under to deliver a whole range of advisory services across a range of benefits and other legal matters. That raises the issue of capacity. The potential for a capacity crunch will depend on the take-up of pensions guidance. That is a critical point. I said at the outset that the Government recognise, through their emphasis on guidance, how absolutely critical it is that savers have the ability to seek guidance on these difficult and complex decisions. Put most bluntly, how is one meant to estimate one’s own longevity? Giving guidance is so important. The fact that take-up could be far lower than 100%—it could be much, much lower—raises its own issues.
A number of witnesses at the evidence sessions were concerned that the FCA has no plans for the second line of defence, as it was called, for those—up to 75% according to at least one witness—who might not take guidance. That is a really difficult issue for the Government. The Minister made great play of how the Government are absolutely committed to ensuring that those taking guidance—we do not know how many people that will be—are signposted towards advice. He used the analogy of wine tasting and wine consuming. There is a big difference, which is the cost of advice. The guidance is free. What is the current annual cost of advice? A saver goes to a financial adviser to ask about the best annuity under the current system. The National Association of Pension Funds has estimated that the average flat-rate cost is £681. That is a hell of an expensive bottle of wine. My hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow would be looking for dozens of cases of wine for £681.