Question to the HM Treasury:

To ask Her Majesty's Government how much they estimate the lack of competition in the pension advice market has cost pensioners; and whether the Financial Conduct Authority or the Competition and Markets Authority have raised concerns about the lack of competition in the market for pension advice.

The Government has acted to support the development of a market that provides consumers with affordable and accessible pensions advice. That is why the Treasury and the Financial Conduct Authority (FCA) launched the Financial Advice Market Review (FAMR) in August 2015.

HM Treasury and the FCA have, as part of FAMR, identified a range of indicators, to understand the demand and supply of financial advice in the market and establish a baseline. These include issues such as the cost of advice, number of firms in the market, consumer engagement, and reasons for not taking advice^[1]. HM Treasury and the FCA will be carrying out a follow-up exercise in 2019 to see the extent to which issues in the market have been addressed.

FAMR also proposed remedies to improve supply of affordable advice in the market. These included setting up an Advice Unit by the FCA to provide firms developing large-scale automated advice models with regulatory support to help bring these to the market more quickly. Automated advice has the potential to provide affordable advice to the mass market, with some existing models charging a fixed fee of below £500.

The FCA has also been considering various issues regarding consumers who do not take advice in relation to their pension. They published the interim report of their Retirement Outcome Review^[2] last year and will publish its final findings shortly. The government will be following the FCA’s findings closely.

[1] https://www.fca.org.uk/publications/research/financial-advice-market-review-famr-baseline-report

[2] https://www.fca.org.uk/publications/market-studies/retirement-outcomes-review