The Financial Conduct Authority (FCA) has a chance to make free impartial guidance "the new norm" as record numbers are set to become eligible to access pension cash, according to Just Group.

The financial services company warned that, with 940,000 people set to reach 55 and gain the chance to cash in on defined contribution (DC) pensions, many people could be left vulnerable to scams and poor decisions if they are left to make “complex and far-reaching” choices without receiving guidance from services like Pension Wise.

Just Group communications director, Stephen Lowe, commented: “The FCA now has a unique opportunity to ensure receiving free and impartial guidance becomes a new norm by setting an approach to ensure far more gain from the valuable guidance than miss out on it."

Just pointed out that, of the 650,000 pension pots accessed for the first time in the 2018/19 tax year, 400,000 were accessed without regulated advice and more than three quarters of these were accessed without a guidance appointment.

Lowe said: “By this time next year more than five million people will have reached age 55 since the pension ‘freedom and choice’ reforms of 2015, yet too many people are still not receiving impartial guidance or regulated advice before accessing their pension money.

“Evidence shows that the free, impartial and independent guidance offered by Pension Wise does have a strong positive impact on the decisions made by users. Pension Wise customers felt better able to avoid scams and were better informed of their options compared to non-users – the problem is that there are too few people benefitting from its support.”

This month, the Money and Pension Service is set to release a report detailing the results of trials that examined how to improve take-up of guidance.

Lowe expressed concern that “no timeline has been set” on when the FCA will publish or consult on proposals, adding that “nearly a million people will slip through the system without the benefit of the free and impartial guidance offered by Pension Wise” in the year it could take for proposals from the trials to be turned into FCA rules.

Lowe concluded: “We are at the peak of a wave of people being able to access pension savings, with this year particularly important due to the greater economic uncertainty created by Covid-19. Every day of delay sees thousands more people accessing pensions without the support they could benefit from.”

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