People who really need good financial advice risk being shut out by FSA-led industry reforms, shadow pensions minister Nigel Waterson says.
Speaking at the Association of IFAs (AIFA) annual dinner last night, Waterson pointed to research suggesting only 51% of people currently receive advice, "a luxury not everyone is able to afford", he said.
However, he argued RDR proposals to change the current system and increase access to advice could backfire.
"There is a risk advice will become more expensive rather than more accessible," he said, reiterating the same fears often voiced by AIFA director general Chris Cummings.
Waterson said to avoid this, the FSA needs to "better define the outcomes of the RDR" with a priority on greater customer engagement with advisers.
"There is no substitute for face-to-face advice", Waterson said.
He added higher qualifications for those working in the industry are a secondary issue, and should not necessarily "take precedent" over on-the-job training.
On Personal Accounts (PA), which he dubbed "the new kid on the block" and which has become a key policy battleground between Labour and the Tories, Waterson was critical, saying "more savings and not more savers" may be the only outcome.
"No-one is queuing up to give advice on Personal Accounts, not the Government, not the Government-in-waiting, no one", he said.
This advice "gap" over the pension reforms could lead to counterproductive levelling down and damage to existing schemes, said Waterson.
He also advocated divorcing Personal Accounts and auto-enrolment.
"There is no reason for PA and auto-enrolment to be umbilically linked," he said, adding auto-enrolment could be implemented as a "soft launch" to test the Personal Accounts Delivery Authority prior to 2012.
"I agree with AIFA: auto-enrolment should be based on how customers behave, not how they should behave," he said.
He also called for a "grown-up" debate on defined benefit (DB) schemes which share risk across employers and employees, and for annuities to be scrapped unless they can be made more flexible.
"Too many people are still not shopping around for annuity deals, but this rigid requirement to buy an annuity by 75 should be made more flexible or scrapped," he said.
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