Experts have backed FCA chief executive Martin Wheatley after the regulator raised concerns about providers’ due diligence as they rush to push new pension products to market in time for April.
In an exclusive interview in last week’s Money Marketing, Wheatley said he feared providers were “struggling to do the level of proper due diligence testing on the products they would need to do in order to feel comfortable”.
He added: “It creates problems for us if providers rush out products that are not properly thought through”.
The Lang Cat principal Mark Polson says some providers could be cutting corners as they work flat out to be ready with new offerings.
He says: “I’m seeing a lot of very stressed proposition teams, peddling quickly to meet the deadline with sexy new stuff. If they can do it safely that’s great, but basic compliance with the regulations should be what we’re shooting for.”
Polson says it is the established life companies with long back books of pension policies that are most at risk because their older technology is harder to adapt.
He adds: “Providers who are saying they are not ready shouldn’t be penalised by advisers for being honest. It’s time to take a long view.”
But Standard Life head of pensions strategy Jamie Jenkins says the company “already has all the parts – workplace pensions, investments, drawdown” and has been spending “more time on conduct risk and due diligence”. However, he says “with new players coming into the market, there are always new risks”.
Aviva head of pensions policy John Lawson says: “Some people will be thinking their survival depends on it and that’s where you get potential issues. Martin Wheatley is right to be concerned – when firms are at their most desperate they do things that are less considered.”
Santorini Financial Planning managing director Matthew Walne says: “There’s always a danger of products being rushed but providers would be mad to do so, considering the legislation still hasn’t been finalised. That said, the established providers haven’t got the stranglehold on the market they once had, so they will be vying for market share.”