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.