Former pensions minister Baroness Ros Altmann has hit out at the government after it removed a measure from the Financial Guidance and Claims bill that would have automatically enrolled people into a guidance scheme if they were taking or transferring pension benefits.
Altmann said she was “disappointed” in the government as auto-enrolment into free guidance would improve take-up and protect more customers.
“I am really disappointed the government seems to have bowed to industry pressure and proposes to weaken consumer protection for pension customers,” she said. “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.”
The scrapped amendment would have seen people automatically enrolled into guidance if they were taking benefits under pension freedom or were transferring benefits.
Instead, providers will now be tasked with asking customers whether they have received “appropriate pensions guidance or appropriate independent financial advice”, whether they would like to wait to have some, or whether they would prefer to continue without any.
‘Small price to pay’
Altmann criticised providers for their role in providing guidance to customers: “The government wants to water down the consumer protection and just require providers to tell people about the guidance, rather than make an appointment for them,” she said.
“Providers already have a duty to ‘signpost’ people to PensionWise – however, this is clearly not working as take-up is so low. Unfortunately, providers too often direct their customers to their own telephone ‘helplines’, which cannot and do not provide independent, unbiased help.”
Altmann said that while it might be “bothersome” for providers to have to automatically make an appointment for customers who want to transfer money out of their pension, “it is a small price to pay for better customer protection”.
She added: “I hope MPs will resist the government’s attempt to remove the consumer protection improvements introduced by the Lords.”
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