Providers are failing to provide effective risk warnings to savers looking to access their pensions, the FCA says.
In its October report into pensions guidance and advice, the Work and Pensions committee advised the FCA to strengthen rules around signposting and risk warnings.
And now the regulator has admitted concerns with the quality of risk warnings being provided by some firms.
In its response to the committee report, the FCA says: “For example, we believe that some firms are not personalising warnings sufficiently, and therefore consumers are unable to understand how the risks apply to them.
“Firms adopting better practices are using follow-up questions in calls to ensure that customer fully understand the warnings.
“We have provided feedback to firms, where necessary, asking them to address our concerns, and we will continue to monitor this.”
It is not the first time providers have faced criticism for their response to the pension freedoms.
In an interview with Money Marketing in November, pensions minister Baroness Ros Altmann blamed providers for low take-up of Government-backed guidance service Pension Wise.
She said: “I’m concerned the providers are driving too many people to their own in-house services.”
Risk warnings have been a point of contention for the regulator, which revealed its expectations for providers in late February 2015, weeks before the pensions freedoms came into effect.
The FCA clashed with The Pensions Regulator months later after TPR told trustees to provide generic, rather than tailored, warnings to consumers.
In October, the FCA announced that the second line of defence rules would not apply to pension pots below £10,000, although TPR chief executive Lesley Titcomb later described the plan as “problematic”.
The FCA has also responded to suggestions from the MPs that providers were hesitant to innovate in advice or pensions offerings because of a lack of regulatory clarity.
The FCA says: “Now that providers have had time to see the freedoms bed in, we are starting to see new products emerge and examples of automated advice models are starting to come on stream.
“We are supporting providers with this process, through supervisions, Project Innovate, which particularly supports new advice platforms, and the Financial Advice Market Review, which we jointly chair with HM Treasury.”