My Lords, once again, I thank noble Lords for their very useful and constructive comments and speeches. I thank the noble Lord, Lord McKenzie, in particular.
As your Lordships know, the Government want to ensure that those who will be able to sell their annuities on the secondary market have access to high-quality information and guidance that enables them to make informed choices. That was endorsed by many responses
to the recent consultation. We want to build on the success of the existing Pension Wise service, for which the satisfaction levels remain high. The Government are committed to using the lessons learned from the implementation of existing freedoms and the Pension Wise service to help consumers in both this market and the new secondary market for annuities.
I draw your Lordships’ attention to the work that the Government are already doing—in both what is happening now and what is planned—through the prism of the amendment that the noble Lord, Lord McKenzie, has brought before the Committee. First, the amendment would commit the Government to undertake and publish a review of the new pension freedoms and pensions guidance. On this point, the Government have already set up a working group of representatives from industry, regulators and government to review the pension freedoms. This group will collect and analyse information on the choices that people are making when accessing the new pension freedoms and related guidance and advice. It will also identify key information gaps and seek to address them.
In addition, early information from HMRC and the regulators has been published, and key data from the Pension Wise service will soon be available on the Government’s performance platform. Pension Wise is also in the early stages of procuring external research, which will cover the extent to which the pensions guidance has enabled customers to make informed and confident choices about their pension arrangements.
Secondly, the amendment would commit the Government to tracking consumer outcomes from pensions guidance. The Pension Wise research that I have just mentioned will aim to do just that. It will help the Government to understand what customers do following their Pension Wise appointment.
I am conscious that the noble Lord asked me some very specific questions about uptake. If he does not mind, I would like to write to him once I have the appropriate information on those points.
Thirdly, the amendment would require the Government to review pension providers’ reporting requirements. In line with its remit to protect consumers and ensure that markets function in consumers’ interests, the Financial Conduct Authority has specifically committed to monitor developments in the retirement income market and to take action where the market is not operating as intended. The first of these mandatory data requests was sent to firms in September. It includes information on both the stock and the flow of pensions savings held by firms, as well as on sales of retirement income products by providers and cash withdrawals.
The amendment also calls for safeguards against pension scams to be strengthened. A priority of this Government is to protect people from scams. A number of cross-cutting initiatives are already in place, but we will continue to look at ways to strengthen messages for consumers and to arm them with the information they need to protect themselves against scams. For example, the Government are already co-ordinating action to raise awareness of, and tackle, scams through Project Bloom, a National Crime Agency-led task force. It includes the regulators, anti-fraud groups, such as Action Fraud, and police forces. In addition,
both the Financial Conduct Authority and the Pensions Regulator have their own pension scam awareness campaigns.
Finally, the Government have put a number of protections in place through the directly provided pensions guidance service, Pension Wise. Pension Wise alerts customers to the risks of scams in guidance sessions, and the website and output document contain warnings and guidance.
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The amendment would also require the Government to clarify the distinction between pensions guidance and pensions advice, which the noble Lord, Lord McKenzie, and the noble Baroness, Lady Kramer, echoed. The noble Baroness’s point about how important that advice is for some pensioners was very valid and well made.
The Government are already conducting the financial advice market review. As your Lordships will know, this is exploring what more can be done to make sure that all consumers can access high-quality, affordable and tailored advice so they can make informed decisions with their hard-earned money. As part of this, the review is looking at what constitutes “advice” and “guidance” in both pensions and other markets, and will seek to clarify that distinction for consumers. As your Lordships know, this consultation is open until 22 December and the review will report by the Budget next year.
The amendment also asks that the Government identify specific risks for consumers in the secondary market for annuities and what additional safeguards are required for the extended pensions guidance service. The noble Baroness, Lady Drake, rightly made the point that it is a very complex area. The Government are committed to taking steps to build on the guidance service that is currently being delivered by Pension Wise to create an appropriate and high-quality service for the secondary market in annuities. The key consumer risks in the secondary market for annuities have already been considered and are outlined in the Government’s consultation document, published in March. Some will be similar to those around the existing flexibilities, but we fully understand, as the noble Baroness rightly pointed out, that there will be additional challenges for consumers in this market. We will need to ensure that consumers are adequately equipped with the information, tools and protection they need to help them avoid scams and, more importantly, to make decisions that best suit their personal circumstances and risk appetite, which brings me back to the point made by the noble Baroness, Lady Kramer.
The Government are also conducting further analysis to identify the needs of those who will be accessing the expanded Pension Wise service. This will ensure that the content and service delivery are appropriate for those thinking of assigning their annuities on the secondary market.
Pension Wise will form a core part of the support package. However, next month, the Government will set out further their intentions for supporting consumers in their response to the consultation on creating a secondary market for annuities. Following that, we expect
the Financial Conduct Authority to consult in 2016 on the consumer protection measures it plans to place on regulated entities participating in the market.
Once again, I thank the noble Lord, Lord McKenzie, for raising these issues, and thank the noble Baronesses, Lady Drake and Lady Kramer, for their contributions. I take on board their concerns and reassure them that the Government are committed to taking action in the areas that have been highlighted in the proposed amendment.
In the light of this, the Government’s view is that the amendment proposed is not necessary to achieve the desired results, and I ask the noble Lord to withdraw it.