The FCA has launched a wide-ranging investigation into how customers taking drawdown without getting advice are treated.
The regulator has announced a thematic review – a form of assessment where the FCA standardly conducts site visits, investigates risks and suggests resolutions for a systemic market issue – into non-advised drawdown sales since the pension freedoms.
The announcement came in the regulator’s business plan for the year ahead this morning.
The FCA says: “We will review the sales processes and ongoing communications of a sample of firms making non-advised drawdown sales since the pension freedoms were introduced. We will assess whether firms are complying with our rules by giving customers adequate information to make an informed decision when they decide to draw down their pension.
“We will also examine if firms give their customers adequate post-sale information to enable them to continue to make decisions that support good outcomes.”
The review is due to report by the final quarter of 2017/18, and will also look at how consumers who do not get advice can be helped to make better decisions.
It is understood that the review will draw from firms from across the market, including Sipp providers and life insurers, and will look to cover a wide range of firm sizes.
The regulator will ask for copies of communications sent to clients, both oral and written, pre-sale and post-sale, alongside training manuals and telephone scripts for sales.
The work will resemble the thematic review enquiries the regulator took to assess the treatment of long-standing customers at life insurers who were in closed-book policies.
Non-advised drawdown sales have spiked since the pension freedoms were introduced. The FCA started collecting data from providers as part of its Retirement Outcomes Review last July.