The Association of British Insurers has raised concerns about FCA pension gudiance rules and backed calls to install a second line of defence.
In Westminster yesterday giving evidence for the Pension Scheme Bill public committee, the ABI said providers want to ask customers basic questions about products even without guidance.
Campaigners concerned about low take-up of pensions guidance want to ensure basic protections are in place even if guidance is rejected.
They are calling on insurers to ask a basic set of questions around relationship status, health and other pension pots to ensure poor value choices are not made.
ABI head of policy Yvonne Braun said providers would ask about areas that materially impact the value of pension products but needed FCA clarity.
Last week, the industry criticised the FCA after the regulator revealed it is not working on any backstop framework to force insurers to do this.
Braun said: “We have discussed it with our members. We are a little concerned the FCA consultation [on guidance] was narrowly drawn, which is understandable because it didn’t have much time.
“We are quite clear that all providers of retirement income should ask a series of very important questions. We set it out in the ABI’s Retirement Choices as an obligation on our members to ask customers about financial dependants, health and inflation risk.
“We would like to see the FCA make its expectation clear that all providers of retirement income products ask customers the same questions so customers are aware of the same risk. It is not clear that everyone is going to take up guidance so there has to be some second line of defence, guard rails, backstop or whatever you are going to call it.”
The NAPF also made the startling admission that it had submitted 101 outstanding issues relating to pensions guidance that have not been addressed by the Treasury.
MPs and pension funds also questioned the regulatory hurdles to offering regulated advice at affordable rates for those with small pots.
Treasury select committee member and Labour MP Andy Love said: “There is no regulated advice at a cheap rate, we have not solved that problem in regulated advice so how pessimistic are you that people won’t take adequate guidance and advice to make a proper decision?”
NAPF chief executive Joanne Segars said: “We need to make sure people come out of the guidance guaranteed equipped to make decisions. We need to make sure people who want to do go on to take advice. I share your concern that we haven’t quite cracked the question about who will provide advice to people without large pots but who could benefit from advice. That part of the market doesn’t seem to be terribly well served at the moment.”