‘(3A) In determining what provision to include in the rules, the FCA must include a requirement for members of a scheme, or survivors of members of a scheme, to indicate before gaining access to or arranging individual transfer of their pension assets either—
(a) that they have received information and guidance made available under section 5 of the Financial Guidance and Claims Act 2017 (specific requirements as to the pensions guidance function), or
(b) that they understand the nature and purpose of that information and guidance and have chosen not to receive it.
(3B) The rules—
(a) must impose an obligation on the trustees or managers of a relevant pension scheme to satisfy themselves that the requirement under subsection (3A) has been complied with,
(b) may make provision about what is to be, or not to be, treated as a sufficient indication under subsection (3A) (which may, in particular, require indication on more than one occasion in specified cases or circumstances),
(c) must specify that accessing a website or receiving published information does not alone amount to receiving information and guidance for the purposes of the requirement under subsection (3A), and
(d) may include exceptions for specified cases (which may include cases of assets below a specified value, cases where information, guidance or advice has already been received, cases of transfers by way of consolidation and any other cases specified in the rules).’”
This amendment would strengthen the provision in the Bill for requiring members of pension schemes to be given access to guidance in specified circumstances, so as to ensure that guidance was actually received or expressly refused.
With this it will be convenient to discuss the following:
Government amendment 2.
Amendment 40, in clause 5, page 4, line 24, leave out “may” and insert “must”.
This amendment paves the way for Amendment 41.
Amendment 41, in clause 5, page 4, line 25, leave out from “manager” to end of line 26 and insert “to ensure that, either—
(a) the members of the scheme or survivors of members of the scheme receive information and guidance made available under section 5 of the Financial Guidance and Claims Act 2017 (specific requirements as to the pensions guidance function), or
(b) they understand the nature and purpose of that information and have chosen not to receive it,
This amendment would require guidance to be provided to members of a relevant pension scheme or their survivors unless they chose to opt out.
Clause stand part.
Government amendment 19.
Amendment 33 would strengthen the Bill’s provision for requiring members of pension schemes to be given access to guidance in specified circumstances, so as to ensure that the guidance was actually received or expressly refused. As I will come to argue later, that is an absolutely key point. I underline once again that the term “expressly” is crucial and should lie at the heart of the Bill and what happens during the next stages.
Our proposed default guidance would strengthen the Bill and ensure that more people were protected when transferring their pension assets. Currently, the system of checks and balances for those looking to move their pension assets from a defined benefit scheme are very strong. Members are offered guidance at the time and those moving more than £30,000 must undertake mandatory guidance. However, at a time when more and more defined-benefit schemes are closing than ever before, there is no such safety net for those on defined-contribution schemes. In our very strong view, default guidance would provide such checks and balances for those transferring assets with more value than they may have ever seen before in their lives.
Although the guidance offered by Pension Wise to those seeking to transfer their pension is of great value to many people, the take-up is relatively low and many enter into transactions without proper prior knowledge of their options and the consequences. Once again I refer to the story I told earlier today about the Port Talbot steelworker weeping because of the consequences of his actions and the 20 people he was responsible for who followed his lead.
The lack of a provision for default guidance has resulted in many members of schemes suffering detriment through scams or through making the wrong choice. The current system of signposting advice by pension providers to members of schemes who want to transfer or withdraw their pension pot is not working as it should. The providers, particularly the rogues, have no business interest in making sure that their members receive the appropriate advice and, as such, it is not made as clear as it should be. The right kind of default guidance—strong default guidance—would promote shopping around, better informed decision making and protection against scams.
The amendment would mean that members of a scheme, or survivors of members of a scheme, must either indicate that they have received the appropriate guidance before accessing the pension assets, or explicitly state that they do not wish to receive it. They must state explicitly and beyond any doubt that that is their choice
The service given by Pension Wise is highly respected and is appreciated when it is given. Between February 2016 and January 2017, 94% of people who completed an appointment were satisfied and 93% felt informed about their pension options, compared with 56% of a control group who had not used the service. However, as Pension Wise would be the first to acknowledge, the take-up of the service is extremely low. The number of appointments made with Pension Wise is rising—there were 66,000 in 2016-17—but that is still extremely low compared with the number of pension scheme members exercising pension freedoms.
Latest figures from HM Revenue and Customs show that some 772,000 people withdrew more than £6.5 billion from their pension pots in 2017. An FCA survey found that only one in eight 55 to 64-year-olds who plan to retire in the next two years and who have a defined-contribution pension had used the Pension Wise service in a 12-month period. Although traffic to Pension Wise’s website is quite high, it is not a sufficient substitute for access to tailored and personalised advice. As Baroness Altmann said in the Work and Pensions Committee,
“When you introduce pension freedom into a marketplace that has never really been encouraged to engage with pensions and mostly does not understand much about them, obviously you need an expert to help you.”
The National Employment Savings Trust has said that it was concerned
“that people appear to be making decisions based solely on a read of the Pension Wise website”,
and from what we have been told about the experience of others, that is absolutely right. The main means of promoting Pension Wise advice is through signposting by pension providers and through advertising.
The Government have said that
“demand for Pension Wise has been very responsive to paid advertising”,
but the DWP cut the advertising budget by 10% to just £4.5 million in 2017-18. Currently, pension providers are required to inform members of the availability of pensions guidance—this is known as signposting—at various stages of the pension freedoms decision-making process.
Under current arrangements, between four and six months before the intended retirement date, the scheme member must be sent a “wake-up pack” including, among other documents, a “clear and prominent statement” signposting to free, impartial pensions guidance alongside a recommendation to seek appropriate guidance or advice. Next, there is a reminder, six weeks before the client’s retirement date. After that there are further signposts to Pension Wise when there is communication with clients about their decumulation options or about facilitating access to pension funds; then, if appropriate, there is a further signpost to guidance as part of risk warnings when the client has made a decision to access pension savings.
When the Work and Pensions Committee looked at the prospect of mandatory guidance, it was told that it would cause “anger and dissatisfaction” with the pensions system and would be likely to lead to a watering down of the guidance given as it would become just a box-ticking exercise. Default guidance means that everyone will be made either to take the guidance or explicitly state that they do not want it—a system that should lead to an increase in the take-up of guidance. A Conservative Member, Paul Masterton, said on Second Reading:
“I remain hugely attracted to the principle of default guidance, mirroring the approach taken to auto-enrolment”— a good parallel—
“with statutory opt-out provisions…if we are looking for something as close as possible to a silver bullet, default guidance is probably it.”—[Official Report,
I could not agree more strongly.
A system of default guidance would be of particular benefit now to those Carillion workers—who knows who will be next?—who may be looking to transfer their pension pot in the coming months, not least to avoid such tragic stories as the one I have told today about Port Talbot steelworkers. Many have been approached by “introducers” looking to make money out of their precarious position. Default guidance would at least give them the chance to receive expert and impartial advice before taking such an important decision.
The Minister has made welcome statements and the Government made positive noises on Second Reading about the need for what is sometimes termed a “further nudge” towards the guidance given by Pension Wise, rather than the current system of signposting. It is unclear why the Government refuse to accept the amendment suggested by the Work and Pensions Committee, which we support. The Government’s watering down—that is what it is—of the Lords amendment on default guidance is wrong. In the words of Baroness Altmann,
“the Government seems to have bowed to industry pressure and proposes to weaken consumer protection for pension customers. By removing a clause introduced in the House of Lords, designed to protect consumers’ pensions better, more people are at risk of losing their hard-earned savings in scams, frauds and unwise pension withdrawals.”
She is absolutely right.
We wait to hear what the Minister will say. We are not satisfied with what the Government have said thus far. It comes down to the simple reality that there is access to high-quality independent guidance that people can count on, and that if people choose not to take it that must be explicit beyond any doubt. It must be unambiguous so that there can be complete confidence that we will not have people, at a time of crisis in their lives, being seduced into making bad decisions for their future.
Has there been some movement? Yes. Have the Government yet gone far enough? No. I wait to hear from the Minister.
May I be clear, Mr Rosindell, that I should speak to amendment 33 and the Government new clauses in the round?
I am grateful. I will therefore attempt to answer the points made by the hon. Member for Paisley and Renfrewshire South as well. I will take her points first, because there is a sequential approach.
Effectively, we are all dealing with three drafts. The House of Lords, in its wisdom, produced clause 5(2). Subsequently, the Work and Pensions Committee, of which my hon. Friend the Member for Brentwood and Ongar is a member, assessed that and produced what is in reality Labour’s amendment 33—the amendment is a straightforward lift from that Select Committee. The Government then went away and produced new clauses 1 and 2 to see if we could improve on it.
I take on board everything that the hon. Member for Birmingham, Erdington said. It is manifestly the case that we all want to see the full guidance. We are about to have a precise discussion as to which is the best way to get to the objective we all seek. The Work and Pensions Committee was sure, as are the Government, that clause 5(2) is not good enough and we can improve it massively. Therefore, with no disrespect to the hon. Lady, we will reject her amendments because they are to clause 5(2).
The principle is the same: how can we best improve the drafting from the House of Lords? There are a variety of points, and I hope the Committee will bear with me as I set out a little detail. The Government amendments are specifically in keeping with the intent of the Work and Pensions Committee, and go further. They make provision for all schemes providing flexible benefits, including all defined-contribution schemes regardless of whether they are personal, stakeholder or occupational pension schemes, including in Northern Ireland.
I will make two points at the outset. First, the Work and Pensions Committee’s recommendation does not include occupational pensions, so in any event it is fundamentally deficient, because one would definitely want that. Secondly, Northern Ireland is not included. While there is no representative from Northern Ireland on the Committee—Jim Shannon has not intervened like he normally does—we are in a situation where I have due respect to our good brethren from Northern Ireland, and we are including Northern Ireland in the provisions, which neither of the other provisions had done.
The Government amendments will ensure that there is what we consider proper consideration and co-operation between the Financial Conduct Authority, the Secretary of State and the single financial guidance body so that the FCA rules and regulations are effective, workable and consistent. This is a discrete, important point. The Work and Pensions Committee amendment would require the FCA to impose rules on pension scheme members, but the FCA’s general rules do not entitle that, so the amendment is defective in that way. It also sets out delivery channel exclusions, which would not be appropriate for primary legislation.
The proposal is that there regulations should be informed by consultation. I think all parties agree on that but suggest different mechanisms to get there. Before the hon. Member for Birmingham, Erdington jumps to his feet, I get that such a consultation needs to be speedy—this is not something for the long grass. The regulations will then reflect informed consultation, with all bodies working together to create the right integrated form, allowing for updates and changes in technology, current user needs, best practice and research on existing rules and regulations as well as taking into account potential exceptions.
It is a brave Minister who starts to give exceptions to the rule, but I will give an example that may assist the Committee. If an individual has very, very small pots, as many people do—perhaps of £10,000 or £12,000—and wishes to transfer them or consolidate them, the nature of the advice, guidance and default in relation to that person will possibly be very different to the British steel worker we are dealing with in south Wales or Scunthorpe.
On the specific amendments, we agree with the broad consensus that we can do more. I have set out new clause 1, which is the effective replacement of clause 5(2). The specifics are that we believe that there are greater criteria and tests in the Government amendments than there are in the Work and Pensions Committee amendment.
I speak as a member of the Work and Pensions Committee. As we set out, clause 5(2) is an improvement on the original legislation. I believe that the amendment made by the Opposition—it is very flattering to see the wording from the Work and Pensions Committee report—was an improvement on that, but new clause 1 and 2 are an improvement on that amendment for the reasons the Minister has set out. All schemes are involved, and the Opposition amendment places the onus on the individual, whereas the Government’s amendments place the onus on trustees or management, which is a preferable way of proceeding. Does the Minister agree?
My hon. Friend is right to make that point. The provider will be required to ask members and other beneficiaries looking to access or transfer their pension benefits if they have received either pensions guidance or independent financial advice. If the member indicates that they have not received guidance or advice, the provider will have to recommend that they seek it. The provider will also have to ask the member whether they want to wait while they access guidance or advice, or, crucially, to confirm that they want to proceed without receiving it.
That will do two things from a behavioural nudge perspective—I suspect we will talk about behavioural nudges at great length. First, asking the scheme member if they would like to wait before accessing their pensions benefits so that they can receive guidance will give a clear steer that receiving guidance is the default option. Secondly, asking people to confirm that they want to access their pension without first receiving guidance ensures that the scheme member has to take an active decision to opt out. We believe that that strikes the right balance. It ensures that people are encouraged to take guidance without removing the element of personal choice. It also does not inconvenience those who have already accessed appropriate guidance or independent financial advice.
I could give a number of different quotes, but I will cite Tom Selby, the senior analyst at AJ Bell, who described the original auto guidance idea as weak and said that our proposal represents an improvement. He said:
“Automatically enrolling members into guidance for each transfer or every time they took money from their own pension pot—when they have already decided what they want to do—would have caused massive delayed and huge complaints.”
It was by no means clear, previously, that
“it would have a material impact on the take-up of guidance. It therefore risked being…ineffective.”
“The new amendment is a vast improvement and, in the short term, should help increase awareness of the importance and value of advice and guidance. It also gives the Financial Conduct Authority breathing room to consult on alternative nudges towards guidance that have been shown by research to be effective.”
The amendments also ensure that the occupational pension schemes that provide flexible benefit are covered—they are not covered by the Work and Pensions Committee’s suggestion—including those in Northern Ireland. Our proposals seek to ensure consistency of approach between personal and stakeholder pension schemes, which are regulated by the FCA, and occupational pension schemes.
It is a pleasure to serve under your chairmanship, Mr Rosindell. I have a point of clarity. Surely a move from recommended guidance to default guidance would result in a higher up-take of independent advice and guidance.
We are into behavioural economics and nudge theory. In broad terms, imposing greater barriers to force people to do things should in principle get a greater take-up. However, there is a fine line. If we place too many hurdles in the way of the individual, they will not move anything even if it is in their interest, and they simply will not engage with the process. While one may agree or disagree with the concept of pension freedoms and having the ability to choose whether to consolidate pots or access them to do with them whatever one wishes, that freedom is available. One therefore has to be careful because, if there are too many barriers in the way, people simply will not engage with that policy.
No doubt I will soon be passed some very technical note giving a much better answer than I have given, in which case I will be happy to try to expand on it. The principle is that we all want more people to take guidance when they need it. That is the whole concept of the behavioural nudges that we are trying to wrestle with to find the right way forward. I will move on, but if I need to come back to the hon. Member for Weaver Vale in more detail, I will.
We believe that the amendments provide a skeleton on which a nudge can be grafted, and that they provide latitude for the rules and regulations, which should be consulted on as a matter of speed, to set out exactly how the interaction between the scheme and the member will take place, including how the questions and recommendations in individual cases are phrased, so as to make the nudge as effective as possible. Within that framework, the FCA and the Department could, for example, require schemes to provide members with a separate letter expressly recommending that they either take pensions guidance or indicate in writing that they do not want that guidance.
The amendments will also provide scope for the FCA and the Department to update rules on technology and customer needs as they change over time. Again, I could list various organisations that support the Government’s approach, but the Association of British Insurers highlights that
“it is important that any amendment gives the FCA and DWP scope to make rules that will have the desired impact on consumer behaviour and should allow government and the industry to find the right practical solution, having worked through the challenges.”
I cannot overstate that we are all in the same ballpark in desiring pensions guidance to be effective on an ongoing basis, and it is right that the details should be set out speedily and that the rules and regulations should come forward as a matter of urgency.
To summarise, the Government amendments will mean that anyone not taking guidance or advice before accessing their pension benefits will be doing so after being asked explicitly to opt out of receiving it. I accept that the detail is still to be set out. I will make it utterly clear on the Floor of the House.
I have addressed the point on clause 5(2) and set out the numerous ways in which we consider that the Work and Pensions Committee—I revere and respect its great leader and all its members—is wrong in its approach. I should have made the point at the outset that, although I will seek to amend the Bill and will resist any Opposition amendments, I am very happy to go away and assess the nature of the debate and to try to provide more detail on Report and Third Reading. However, for the present purposes, I commend the Government amendments to the Committee and will resist the others.
With respect, I think the Minister probably underestimates the public’s disengagement with pensions. I sat through many pensions discussions when I worked with Citizens Advice, and also discussions on my own pension, and I stared out the window and wondered when I could stick nails under my fingernails—and I was vaguely interested in the subject.
I praise the work of the Behavioural Insights Team, of which I am a big fan. It is about time we made policy based on what people actually do, rather than what we think they should logically do. It has some interesting analysis. The extent of consumer distrust and disengagement was evident from the trials of the Behavioural Insights Team’s pre-retirement “wake-up” packs last year. Those trials were run in collaboration with Pension Wise, the free pension guidance provider. The packs had a limited impact on the number of customers who subsequently used guidance. The strongest performing wake-up pack increased customers’ likelihood of calling Pension Wise by only 3.5%. Nothing indicates better the impact of disengagement and distrust and the low capability. It is unrealistic to expect customers to absorb the level of information required from provider communications or online contact. The FCA’s retirement outcomes review found that only 10% of customers had even read the pre-retirement wake-up guides, which also indicates why provider signposting is likely to have a limited impact.
Pension providers have exploited that inertia. Three previous investigations into the old annuity market identified low levels of shopping around and poor awareness of the available product options. That is still evident today on a timeline that has been produced, showing attempts since 2001 to make an impact on people’s awareness of pensions.
The FCA retirement outcomes review interim report said:
“We are concerned that consumers motivated by mistrust in pensions”—
I do not think that trust has been increased by such matters as Carillion, the state pension scheme or women of state pension age. It brings distrust of the whole pensions system, whether state pensions, occupational pensions or cash purchase pensions, which make it extremely difficult to understand what will be paid at retirement age.
The report goes on to say that such people
“may be making uninformed decisions that result in paying more tax than they would have paid otherwise…or missing out on the benefits of staying invested” and that they
“do not always take advantage of the help and guidance”.
People need to take advantage of that before making a decision. It is not like switching bank accounts. People cannot switch pensions for a year and then think, “Actually, I’m not very happy and I want to go back.” It is a long-term decision, and an important one.
Let us stop pretending that the wake-up packs are a legitimate source of information, and not build on them. I am pleased that we will consider measures further, but they need to be strengthened now. New clause 1 does not strengthen anything; it weakens it. Relying on looking at it later is not good enough for something as important as a pension.
I also appreciate the Minister’s honesty in getting straight to the point and saying that he will reject amendments 40 to 41. To return to my point, I think that if we do not strengthen clause 5, it will be a real missed opportunity. The Lords amendment was a welcome move in the right direction—that is why I was quite looking forward to building on it—so it is a disappointment to hear him say that the Government will carry on with this watered-down version.
It seems totally counter-productive if we are now at a stage where we acknowledge as we write policy that people do not understand pensions and they do not have a clue about them, on the whole. That is the gist. People want someone to hold their hand through the process, not ask them, “Have you had advice?” “No, I haven’t.” “Right. Okay, we’ll move on.” The Minister said that the onus would be put on the individual. To me, what the Government are suggesting does put the onus on the individual rather than on an independent body to hold people’s hands and guide them through the process. It seems like a missed opportunity. Forgive me if this is the wrong time, but I will press amendments 40 and 41 to a vote at the appropriate time.
It is always a pleasure to serve under your chairmanship, Mr Rosindell. I declare a couple of interests: I am a member of the Institute of Chartered Accountants in England and Wales and of the Chartered Institute of Taxation. Part of the Chartered Institute of Taxation has a low-income tax reform group, which includes a couple of charities that play a leading role in helping those who are on low pay: TaxAid and Tax Help for Older People. Before my time in Parliament, I was the north Kent volunteer, as a member of the Chartered Institute of Taxation, for Tax Help for Older People. Often there would be a widow or widower facing consequences that they did not quite know how to deal with, and that would be where the charity came in to help. Obviously, a lot of that work now happens through our surgeries on a weekly basis.
We live in a different world now, with auto-enrolment accumulating very nicely among millions of people across the country. If we are having difficulty today, we will have some very serious money in the future that needs to be dealt with, and people will need appropriate advice. I mentioned on Second Reading that the amounts involved across the country over the next 10, 15 or 20 years could amount to literally hundreds of billions of pounds.
Even without auto-enrolment, there are a number of choices that people need to take on board. Someone may be lucky enough to have a defined-benefits scheme. They are in the descendancy, for many reasons, but I have heard of instances of people who work for banks, in particular, having a defined-benefits scheme. They could be cashing that in, and thinking about a change to a different scheme of up to 50 times the annuity rate. Again, we are talking about very big figures.
People need to make a number of choices at various stages when approaching retirement: whether they should have a defined-contribution pot; whether an annuity is right for them—probably not a decision that many people are making, given the current low interest rates—and whether to change provider. I can see there being hundreds of thousands, if not millions, of people in a few years’ time who have been using NEST, for instance—the easy provider that many small employers are using—reaching the age of 55 or above and asking themselves, “Well, what now? Would changing to a different provider be better for me? Would a draw-down facility on my pension by best? Should I consider the inheritance tax benefits?” We are now in a new world where pensions are a very generous potential inheritance tax-saving product. They might also ask, “What are the factors of my health?” Health might play a very big part in whether someone wants to take all their income now as a full draw-down, or eek it out into the future. There will be a multitude of choices that people should make. People’s personal tax position should also never be forgotten, so that they take their pension in the most efficient way possible.
I would call this group of amendments, very simply, “the scam blockage and advice enlightenment measures.” They are very welcome and, from what I have seen of the Government’s proposals, I am fully supportive of them. I think they take on board the suggestions of the Work and Pensions Committee. However, I have spoken many times, and remain concerned, about what constitutes advice. I note in new clause 1(1)(d) that the FCA will be entitled to put together rules about what constitutes advice.
I remain concerned that somebody with a smaller pot—perhaps a pot of £30,000, which will be a very common position for many people to be in under auto-enrolment in the future—may get involved with SFGB and take the full advice. They will be told, “These options are available to you.” However, I do not think that the legislation provides for advising people what the best provider and tax situation is for them. It is still hoped in new clause 1, as good as it is, that people go and get advice. That advice is simply not available in the market because independent financial advisers will look at a small pot and say, “Well, for the fees involved, I don’t really want to take you on.”
I have spent considerable time pushing for flexibility under FCA rules to allow people to see an IFA on almost a no-liability basis. Instead of the IFA having to do a full “know your client” assessment, which takes a long time and costs a lot of money, I propose an appointment with no liability on the IFA’s part. That would at least give people some help and guidance, which is infinitely better than none.
That point leads me to the role of organisations that work closely with people, such as citizens advice bureaux, Age UK, TaxAid and Tax Help for Older People. Those organisations are trusted by Her Majesty’s Revenue and Customs as semi-agents, as it were. As advisers working for free, they should be able to get involved with people’s affairs without going through the whole rigmarole of engagement letters and liability. There is a case to be made that some of those institutions accepted by HMRC, such as Tax Help for Older People and specialists within Age UK and citizens advice bureaux, should be able to tick the box to say, “Yes, guidance has been given, we have had an assessment, and it is now safe to proceed under Government new clause 1.”
That is a very broad interpretation of where we are. I am not sure how we can put it into the Bill on Report, but it relates to an issue that I will continue to raise throughout my time in Parliament: people need advice. Allowing advice on the basis of no liability for the advisers would at least mean advice being given where none is given at the moment.
This has been a good debate, with some powerful contributions. I absolutely agree with the hon. Member for South Thanet on the scale of some of the problems. Those include some welcome problems with auto-enrolment, but also situations in which people with their backs against the wall are being taken advantage of. The sheer scale is immense, so it is hugely important to get this right. As the hon. Gentleman said so compellingly, it is crucial that we should be confident that the mechanism for default guidance is robust and will work.
My hon. Friend the Member for Makerfield made a typically powerful and well informed contribution. A provider recently spoke to me about “pension ignorance”—I am not sure that I would quite use those words, because they sound a wee bit insulting, but I know what he meant. There is a lack of knowledge about pension entitlements, because pensions are very often seen as being in the distance. My hon. Friend was absolutely right to raise that point. As I argued earlier, neither the take-up of currently available advice nor the trials to improve take-up inspire us to believe that the Government have got it right yet.
The Minister described our amendment as the Labour amendment, which of course it is—we tabled it. However, I dare to say that it was the product of the Work and Pensions Committee, working on a cross-party basis—a collective wisdom with which we agree. The Minister’s point about the importance of looking at pensions in the round is correct, because we are looking at the totality of pension arrangements for the future. He said, with good intent, that there would be a speedy process to consider regulations at a future stage. The problem is that we have to get it right when we specify in the Bill what the expectations of Parliament are.
Let us compare the Government’s proposals with the status quo. Interesting work has been done to compare the FCA’s conduct of business sourcebook—COBS—with Government new clause 1. It would seem that the Government have not moved as far as they should have, so it is important that we get this crucial issue right in the Bill. Of course the Minister is right when he says that circumstances vary enormously, but we strongly believe that there is an absolute principle that must be enshrined in law. Crucially, it is not about erecting barriers. On the contrary, we want to help people to make their decision and ensure that they have access to the advice and guidance necessary when they come to make that decision.
The wording proposed is not yet good enough. Ultimately, we seek an outcome in the Bill that puts it beyond any doubt that the individual can be shown to have made a conscious decision and to have decided not to access that guidance. The Minister has referred to a nudge, which has its place but, frankly, a nudge alone, in the traditional sense of the word, is not enough at this stage. We need a strong statutory obligation and entitlement. I stress again that the consequences of what happens if things go badly wrong are heartbreaking. We have all seen it. That is why there is a determination across the House to ensure that some of the abuses of the past are not carried forward. For that to be the case, we need strong and unambiguous law.
The Minister has said that the Bill is a skeleton that we can put flesh on the bones of. The hon. Member for South Thanet made the point, which I understand, that this will be a significant issue on Report. To be frank, there is no flesh on these bones to show what needs to be done at the next stage. I hope that the Minister will listen not only to us and to the Work and Pensions Committee, but to the widespread expressions of people who are reputable in a vast industry—of course, there are people to the contrary, but they are not particularly fazed by what we propose—who recognise the importance of what we are arguing. I hope that the Minister will hear their voices as well as ours.
Amendment made: 2, in clause 5, page 4, line 13, leave out subsection (2).—(Guy Opperman.)
This amendment removes subsection (2) of clause 5 (inserted by the Lords), which required the FCA to make rules requiring trustees or managers of personal and stakeholder pension schemes to ask whether members have received guidance before accessing or transferring their pension. This duty is developed in the new clauses inserted by NC1 and NC2.