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This week’s highlights feature the Chancellor’s major pensions review and a significant rise in adviser reports, surpassing 100,000 per month due to the Consumer Duty.
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Chancellor launches landmark pensions review
The new Labour Chancellor Rachel Reeves has initiated a comprehensive review of the UK pension system to boost investment, increase pension pot sizes and address inefficiencies within the sector.
Unveiled on July 22, the plans could unlock billions of pounds of investment in the UK economy from defined contribution schemes alone, potentially boosting pension pots for savers by over £11,000.
This reform will unfold in two stages, targeting immediate and long-term pension management improvements.
Adviser reports surge to over 100,000 a month due to Consumer Duty
As the Consumer Duty anniversary approaches, Dynamic Planner has reported a significant increase in the number of client reports generated by advisers.
The company saw a surge to over 100,000 reports per month in June, reflecting a 100% year-on-year increase from the 40% of the UK advice market it serves.
The Financial Conduct Authority’s Consumer Duty, which aims to set higher standards for consumer protection across the financial services sector, came into force last July.
Ignore calls to adopt 30% rate of pension relief, government urged
The government should, for the time being, ignore calls to adopt a flat 30% rate of pension relief, say accountants and business advisers James Cowper Kreston.
The firm argues that implementing this change would be “horrendously complicated” and likely impact key public sector employees. Reports indicate that proposals presented to Chancellor Rachel Reeves include introducing a flat rate of 30% tax relief on pension contributions.
Greg Moss: Watch your back, Tom. Having more clients isn’t as impressive as you think
Greg Moss critiques the notion that having more clients is inherently impressive, emphasising the importance of service quality over quantity.
Using his own experiences and interactions, Moss argues that high client numbers can compromise the thoroughness of financial planning services. He suggests that the Consumer Duty regulations highlight the disparity between firms that genuinely prioritise client needs and those that don’t.
Over 70% of British Steel Pension Scheme clients received no compensation
Over two-thirds of clients who received unsuitable advice regarding the British Steel Pension Scheme (BSPS) did not receive compensation through the redress scheme.
According to a report from the FCA, published on 24 July, changing redress values resulted in about 70% of claimants not receiving any compensation. The report also showed that the amount paid to claimants was £8.7m, far less than the £71.2m the FCA initially expected to be paid by advice firms.
Concerns rising over retirement of financial advisers, research shows
A new study from Investec Wealth & Investment (UK) reveals significant concerns among UK investors about the impending retirement of their financial advisers.
According to the research, 20% of investors are “very concerned”, while an additional 26% are “quite concerned.” The study surveyed 535 UK investors with stock market-related investments and found that 61% plan to stay with the same firm and choose another adviser within the company if their current adviser retires.
Is drawdown forcing the mass affluent out of advice?
Amanda Newman Smith highlights how regulatory changes in the retirement market are impacting ‘mass affluent’ clients, with some advisers dropping drawdown clients whose pension pots fall below minimum investment thresholds, making them unprofitable.
This raises concerns about the quality of service and client engagement. Advisers face the challenge of balancing service costs with client needs, especially for those with diminishing pension pots. Potential solutions include tailoring services, reassessing annuity options and segmenting clients, but commercial pressures complicate sustaining smaller clients long-term.
Millions to delay retirement as pension savings gap widens
Millions of UK workers are likely to delay retirement due to a gap between their desired retirement age and their pension savings, according to a report.
While most people aim to retire at age 62, 54% of UK retirees expect to work longer than planned, on average by seven years. Additionally, 27% of those who have made retirement plans feel they may never be able to afford to retire, as highlighted in Scottish Widows’ latest Retirement Report.
Diary of an aspiring adviser: Why I’m going to stick with being a paraplanner over being an adviser
Ryan Sharpe explains the decision to remain a paraplanner rather than pursue a career as a financial adviser. Initially viewing paraplanning as just a stepping stone, Sharpe now appreciates the role for its technical depth and the continuous learning it offers.
Sharpe enjoys the detailed work of report writing and the predictable hours, which allows for further study. Sharpe values being a go-to expert and teacher, and believes continued paraplanning will strengthen future advising capabilities.
Customers see ‘no difference’ in service levels post-Consumer Duty
A year after the FCA’s Consumer Duty was implemented, 84% of consumers report no improvement in how financial providers treat them.
A new study by Smart Money People reveals that 7% of consumers have experienced a decline in service quality over the past 12 months. Key frustrations include lack of human support (48%), untrained staff (34%), unavailable phone numbers (32%) and excessive reliance on chatbots (24%).
