As another tumultuous year in financial services draws to a close, it’s easy to be drawn into a spiral of negativity about what the future holds.
Indeed, the message from the very top of the UK government has been deliberately depressing, warning of the fiscal and social “mess” the previous administration left us in.
An Autumn Budget that hiked costs for businesses, maintained frozen income tax thresholds, hit investors through hikes in capital gains tax and raised death taxes, including on pensions, did little to lift the mood.
Proposals to bring pensions into inheritance tax, in particular, look a bit of a mess – although there is at least time for the government to pivot and adopt a more pragmatic solution.
All of that said, there are some rays of sunlight as we edge towards 2025.
The Advice Guidance Boundary Review initiated by the Treasury and Financial Conduct Authority under the previous government continues to progress, with a consultation on improving guidance for retail customers via targeted support expected next year.
While there is still some way to go to ensure everyone in the UK has access to the help and regulated advice they need, the fact both Conservative and Labour administrations appear determined to tackle this issue head-on has to be a good thing.
Simplifying Isas should also come onto the agenda in 2025, with Labour having committed to the policy and pledging to focus on increasing the use of stocks and shares Isas ahead of the general election.
If sensible reforms to the advice guidance boundary can be paired with Isa simplification, the UK will have a much stronger foundation to develop a strong, long-term investing culture, with advisers at the heart of delivering good outcomes for millions of people.
And, dare I mention it, pensions dashboards reforms are progressing and should eventually allow people to see all their retirement pots in one place online. The government and regulators are taking an ultra-cautious approach here, with commercial dashboards seemingly on the backburner for the time being.
While it is easy to become cynical about a project that has been delayed this many times, the fact that, in the next few years, millions of people will have a tool that allows them to quickly locate all their retirement pots has the potential to be a game changer.
The key challenge once we have a dashboard will be ensuring people who are reunited with their lost pensions are able to access the help they need when deciding ‘what next?’ – something the Advice Guidance Boundary Review could help address if implemented properly.
Uncertainty about the tax treatment of pensions reared its ugly head ahead of the October Budget, with persistent rumours the government was planning to target upfront retirement savings incentives or tax-free cash.
In the event, both were left untouched, providing at least a modicum of stability – at least until the next Budget in the second half of 2025. We will continue to campaign for a firm pensions tax lock commitment from this government, so savers can be confident to save for retirement without the constant fear that the chancellor might move the goalposts.
The challenges facing advisers and clients, from navigating regulatory and political change to dealing with higher interest rates and economic uncertainty, cannot be understated. They remain huge.
But I am convinced there are plenty of reasons to be optimistic as we prepare to tuck into turkey, stuffing and maybe a few well-earned beverages over the next few weeks.
I hope you all enjoy a break, however you choose to celebrate the festive period. It’s undoubtedly been another year filled with challenges for the financial services industry and the role of advisers helping people achieve their long-term goals is ever more important as we prepare to embrace the new year.
Tom Selby is director of public policy at AJ Bell
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