The Consumers Association is again rattling on about yet another subject it hasn't researched properly!
The CA has called for free advice where an adviser recommended the person contract out of the State Second Pension (S2P) and its forerunner the State Earnings Related Pension Scheme (SERPS). The Association of British Insurers is currently working with pension provider companies to write to all people currently contracted out of the State Second Pension. The idea is to highlight the potential risks of being contracted out and the need to take advice.
What the Consumers Association is doing is unprofessional when the ABI is doing it in the most sensible way.
Our View
Consumers that do not fully understand their finances tend to leave them on the 'too difficult' shelf and hope everything is okay. This has happened with endowments and other products too.
What people need to have is straightforward information to help them decide to take action. If they then choose to see their adviser, then most will provide the facts and help them contract back in. Whether or not they charge a fee for the service will depend on their client relationship.
We seem to remember the Consumers Association's endowment letters backfiring, with at least one insurer (whom we won't name) automatically declining complaints received in that format.
Can we suggest that instead of 'demanding' free advice, consumers contact their adviser and ask what they should do?