Clearly, if someone had a fiendishly complicated financial situation with multiple pension pots and other assets, other income and a load of debt, that would be a horribly complicated conversation that could not be held in half an hour. We are not trying to get recommendations or advice. We are trying to give people an understanding of what issues they have and what options are available. I agree that if people really have no understanding of any of this, trying to bring them to any kind of understanding in half an hour would be impossible. But equally, there may be some people who have a £5,000 pension pot who do not have many choices and do not need to understand all the potential things that are out there for them. In that situation, they might not need half an hour.
If we think that in general at least half an hour is the right answer, is that something we should set out in the Bill? I take the point that it might be going into a little too much detail, but is that the expectation that we are setting the regulator? Is that the expectation we are setting in the contract with the CAB and with TPAS—that they will be resourced and funded and the levy will be set so that there will be half an hour for each person who wants it? Perhaps the Minister will answer that.
On ensuring the guidance is taken up, the Bill rightly includes duties on pension funds to market the guidance at the right time and in the right way. I instinctively think we should have a regulatory-approved flyer, letter or e-mail, so that the provider sends out something with approved content that is in the right format and easy to understand, and plays up how important the issue is, rather than something in the middle of a pre-retirement pack where, on page 37 in the bottom right-hand corner, it says, “By the way, you can seek independent guidance if you have the time.” It must be flagged up in a high- profile and positive way that explains that the guidance is impartial and will be of real use to people, and not simply one of the many regulatory things that we get in the back of a pack and never get round to seeing.
We have a DWP Minister here setting out a lot of Treasury duties. We appear to have none for his own Department. When people come up to their retirement age, not only do they get a pack from a pensions scheme, but they get correspondence from DWP telling them they are about to come to retirement age and can draw their state pension: “This is what it will be, and you can defer it if you want.” Deferment is an important decision, because the returns are quite generous.
It strikes me that the DWP communication is really where we should promote the guidance. It comes at the right time, it is from a trusted source, and it is clearly relevant because it tells someone what their state pension will be. Should not the DWP flag up the availability of the guidance in its communication as well? That is why I want a duty on DWP to promote the guidance, as suggested in amendments (a) to (c). It seems eminently sensible that we spread the love around and have joined-up government in this situation, so that all the Departments that engage with people as they approach retirement really make the guidance work.
Finally, how do we follow up and protect those who have not taken the guidance or have not understood it? There is only one way to do that. When the industry is selling products and making final decisions, it could ask people whether they have had the guidance. It could flag up that they ought to have done and could ask whether they are sure they want to waive their right to it before signing up for a product. We need to get such questions asked in a fair and clear manner.
Clearly, if I am selling something and I am about to meet my monthly sales target, I will not want someone to hang up the phone and go and take their guidance and not come back. We need the regulator to be quite strong with providers. People need to understand what they are doing. We do not want mis-selling and aggressive selling of the new super-whizzy scheme that has been drawn up to meet people’s alleged needs. We do not want to repeat the mistakes of the annuity market, where people were buying things that simply were not suitable, so we need a caveat—have people thought about what will happen to their spouse if they predecease them, or about their general financial position and their health situation? Do they have health conditions that mean that buying an annuity is still not the right thing for them to do? They need to think it through carefully.
It is important to get the regulator to take real action from the start so that we do not have a load of mis-selling before we get protections in place. We do not want the first cohort of people in 2015 and 2016 to be guinea pigs. We do not want mistakes and mis-selling to happen so that we then start to beef it up and sort it out in 2016 and 2017. The guidance needs to be of the right quality and in the right place from the start. I therefore commend amendments (a) to (h) to new schedule 2 to the Committee.