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FCA delays review into pension freedoms risks

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The FCA has delayed a review into opaque drawdown charges and non-advised distribution to align it with other work including the Financial Advice Market Review.

In its retirement income market study, the regulator identified new risks to savers accessing their pension since the freedoms took effect.

These included how consumers could struggle to compare products because of complexity and opaque charges in areas such as drawdown.

It said it would examine these issues in a retirement outcome review to be published early next year, but this has now been pushed back to the second quarter of 2016.

In an update published yesterday, the FCA says: “Having considered developments in the market since the introduction of the pension reforms, other FCA work and wider initiatives, and the feedback we have received from stakeholders, we now anticipate that we will launch this review in the second quarter of 2016.

“By revising the timing of this review, we will be able to sequence it effectively with other FCA work and wider initiatives, including the Financial Advice Market Review, our ongoing consultation on changes to our pension rules and guidance, our data collection exercises, and the Government’s next steps on exit charges and pension transfers.

“It will also allow us to use a longer data set for our review, providing us with a more robust picture of how the market looks following early reactions to the pension reforms.”

The review will address product charges, the impact of advised and direct distribution channels, and how consumers are coping with decision- making post pension freedoms.

A data request was also sent to providers today to help the regulator understand the new landscape, including the range of charges being levied and when consumers are being asked to take advice.

The FCA says the findings will be published in summer 2016.



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There are 2 comments at the moment, we would love to hear your opinion too.

  1. The FCA’s review into “developments in the market since the introduction of the pension reforms” sounds like a lot of smoke and mirrors to disguise the fundamental conflict between the government’s avowed policy of enabling people to do what they want (rightly or wrongly) with their pension funds and the fact that there are no safeguards for advisers faced with insistent clients intent upon going against advice not to do something.

    I refer of course to the FOS’s standard policy of disregarding signed disclaimers of liability on the adviser and accepting false statements from complainants, typically “Mr X didn’t explain to me properly the implications of going against his advice”, “I didn’t understand what I was signing”, “Mr X didn’t give me a chance to read it properly, he said it was just a formality” and so on.

    If advice to a client not to do something has been properly documented, explained and recorded and the client signs a disclaimer confirming that he understands it but wants the adviser to facilitate a different course of action anyway, that should be binding on him. But it isn’t, so most advisers will not deal with insistent clients, who then cry foul for having had to pay for advice that happens not to accord with what they’ve already made up their minds they want to do.

    The FCA could solve this at a stroke simply by declaring that a disclaimer of liability shall be binding on the person who signed it. Yet instead it’s planning yet another review that won’t be published until the second quarter of next year.

    I’m not saying that it should be made easy for clients to pursue a course of action likely to be to their long term detriment, but the fact is that although the government has declared that people should be free to make their own decisions, regulatory policy is fundamentally at odds with this.

  2. Surely this should be a priority.

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