We welcome many of the recommendations set out in the recent public financial guidance review (PFG). A model based on commissioning the provision of debt advice, money guidance and financial capability services has many strengths and will harness effectively the expertise of organisations working in these areas.
There has never been a time when personal finances have been as complicated as today, and championing financial capability ought to be something the Treasury and DWP are putting significant leadership and resources into. However, we fear that the laudable intent outlined in the PFG proposals will be undermined by the suggested structure and remit of the money and pension guidance bodies.
Our central concern is the intention to create two separate organisations and split delivery between money and pension guidance.
With the move towards greater individual financial freedom and responsibility, decisions about retirement provision and personal finance are becoming inseparable. And with the direction of pension reforms and the Lifetime ISA (LISA), this is driven to a large degree by government policy. The Treasury and DWP should therefore embrace holistic money guidance, rather than artificially separating financial issues that are intrinsically linked.
We therefore call for a single money guidance and financial capability body able to address holistic financial needs including retirement provision.
We make this call for the following reasons:
- Decisions about retirement provision cannot be separated from budgeting, savings, debt, rent or mortgages – i.e. money guidance
- Pension reforms such as the LISA mean that the accumulation stage cannot be looked upon in isolation from an individual’s wider financial situation
- Specific pension guidance will only be of use for a limited cohort of people in the decumulation stage who have no other savings or any debts
- Inevitable hand-offs between providers will deter customers
- There will be inevitable duplication and resources will not go as far split between two bodies
A single organisation will not only avoid the pitfalls set out above, but will allow much more to be achieved with the same resources. This includes a broader and more holistic service and the building of one brand that can provide money guidance throughout life. Limited resources would be better spent holistically, rather than building and marketing a brand and website dedicated only to pensions.
To read our full response, and The Money Charity’s full list of written consultation responses, click here.