There is an old business adage that says a camel is a horse made by committee. It starts with good intentions – smooth, fast and fit for purpose – and comes up with more humps and a clear surrender sound.
One cannot entirely deny the suspicion that somewhere in Whitehall, a committee of camels is quietly shaping the UK’s financial policy.
If the war in Ukraine is going to struggle for air time amid media attention and an endless reign of chaos, what chance is there for the media to focus on the gradual, brick-by-brick dismantling of the pension, investment and tax system?
Which may explain how the latest reduction in pension transfers has fallen in the pre-Christmas negotiations. No ads. In personal finance, the damage quietly accumulates – just like having Japanese knotweed on your foundation.
Under the FCA’s proposal, pension providers who receive a transfer request will be required to obtain detailed information from the existing scheme – guarantees, fees, key features – before proceeding, unless the provider actively opts out.
A person’s financial plan is like a construction site where scaffolding is moved as people climb it.
The ceding provider will have ten working days to respond. The receiving firm will have three days to present the comparison to the member.
The goal is consumer protection. A possible consequence is delay.
This is not easy because, as recently as 2023, slow transfer times were identified by the FCA as a consumer risk. It transfers pitfalls to costly legacy configurations, stifles connectivity and frustrates communications. Now, in order to improve decision-making, we risk making corrective action slow and bureaucratic.
Worse still, the requirement would only apply to schemes regulated by the FCA. Occupational pensions without its direct payment – including some of the participants who are comfortable in the transfer market – will not face the same discipline. The system of symmetry is conspicuous by its absence.
But this is not just about transfer. It’s about a broader pattern.
Over the past 18 months, personal finance has begun to resemble a construction site where the scales are moved as people climb.
None of these steps can cause disaster. However, when they come together, they develop insecurity
The proposal to withdraw unused pensions from the inheritance tax system is an example. The issue is not the tax itself, but the decision to revert to the existing IHT framework – a move met with unanimous concern across the industry.
What is difficult to confirm is the insistence on this path, revealed in a Budget with few early signs and few commitments, immediately disrupting decades of strategic planning. Retirement and intergenerational trends have gone downhill overnight.
The conversion of Isa followed a similar pattern. Advertised in the language of growth and power, but without meaningful consultation, it adds structural complexity to a system that already struggles for clarity. If the goal was to make retail investments more accessible, the method chosen was not fit for purpose.
Alongside this, we have seen tax cuts that have been suspended attracting more savers to the upper echelons, reductions in capital gains and dividend yields, ongoing speculation about pension tax cuts and a steady stream of fiscal reform.
None of these steps can cause disaster. However, when they come together, they develop insecurity.
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Consultants are now constantly giving advice on “what the next Budget can do”. That is not indicative of a sustainable long-term plan. It is an indicator of policy risk that is discounted in the budget.
Which brings us back to the transfer of pensions.
If the opinion of the FCA is that customers may not fully understand guarantees, fees or important features before transferring, there is a clear and equal solution: it requires that this information is clearly included in the annual reports of the pension declaration.
All pension funds now have annual communication obligations. If the administrator believes that certain data points are important – guarantees, exit terms, charging processes – order that they be included in a standard, prominent form in those annual reports. Make sure members get the information every year, not in the transfer zone.
That approach would enhance understanding without adding friction to the interactions that consumers have already chosen to initiate. It would solve the information gap without introducing the timing problem.
I have nothing against camels. In the right environment they meet nature. The problem is thinking of them as racehorses
Because once the device has decided to merge, the delay is not financially neutral. Markets move. Circumstances change. Systemic drag destroys confidence. The industry has spent years trying to innovate and create digital transmission systems. It would be unfortunate if progress was set back by well-intentioned but senseless interventions.
The general issue here is not an idea. It is instability.
Personal finance is drama-free. It requires foreknowledge. Employees engage when they believe the rules are fair and sustainable. They hesitate when the country sounds tempting.
And in matters of personal finance, hesitation is rarely the friend of good results.
I have nothing against camels. In the right environment they meet nature. The problem is thinking of them as racehorses. A personal financial plan must reflect the environment in which we actually live. It does not require more sophisticated design than ever before; it needs clarity, stability and confidence that the ground will not change from year to year beneath it.
If we insist on planning a camel committee, we should not be surprised if the saviors go down quietly.
Andy Bell is the co-founder of AJ Bell
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