Source · Select Committees · Work and Pensions Committee
Recommendation 20
20
Since 2014, the FCA and the Pensions Regulator have been running ScamSmart campaigns to alert...
Recommendation
Since 2014, the FCA and the Pensions Regulator have been running ScamSmart campaigns to alert people to the risks of scams. The campaigns have made effective use of limited resources to target groups vulnerable to scams. We recommend that Pensions Regulator and FCA should continue to run the ScamSmart campaign, while regularly evaluating whether it is reaching the right groups and whether it has the necessary resource to do so effectively. (Paragraph 79) 60 Protecting pension savers—five years on from the pension freedomss Pension scams
Government Response
Acknowledged
HM Government
Acknowledged
The Government’s consultation in February 2017 on the Pension Advice Allowance2 explains the rationale for introducing limits to the amount that pension scheme members can withdraw under the allowance. 2 https://www.gov.uk/government/consultations/introducing-a-pensions-advice-allowance/introducing-a- pensions- advice-allowance-consultation Responses to the Committee’s Fifth Report of Session 2019–21 15 It explains that the £500 annual cap was introduced for two main reasons. First, the 2016 Financial Advice Market Review (FAMR) had concluded that automated advice services could significantly increase provision of affordable financial advice to the mass market, and several such services cost around £500 when the consultation was drafted. Second, there was an expectation that, where the annual cost of advice would exceed £500, the allowance would be used as a partial but significant contribution towards this cost. This was based on a calculation that face-to-face advice cost on average £150 per hour, and that advice on pensions could take up to 9 hours. The consultation also explains that the overall cap of three times per person was introduced to reflect a trade-off between financial resilience and consumer protection. In December 2020, HM Treasury and the Financial Conduct Authority (FCA) published an evaluation of the FAMR. This showed that the financial advice market is moving in the right direction, with more people accessing financial advice. However, there are still some remaining policy challenges to help the market work better for consumers, for example how we help consumers make better investment decisions. Building on this evaluation, HM Treasury and the FCA are doing further work to address these policy challenges and are continuing to monitor the take-up and effectiveness of the Pension Advice Allowance. Enforcement