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FCA sets out plans to regulate pension freedoms

The FCA has made pensions and retirement income a key plank of its policymaking for the coming year, as it warns providers about attempting to sidestep the Pension Wise service.

In its business plan for 2015/16, published today, the regulator says given the changes to the market over the last year pensions will be a “significant area of focus”, including policy, supervision, market studies and thematic work.

The regulator also warns that if consumers are unable to access appropriate information and guidance the reforms could reduce competitive tensions in the market.

It says: “There is a…risk that, without appropriate information and guidance to empower consumers, greater choice and the offering of more complex products in the pensions market will reduce consumers’ confidence and appetite to shop around and so weaken competitive pressure on providers to offer good value in this market, as highlighted in our market study on retirement income.

“We also believe there may be an increased risk of scams at the point of liberalisation and onwards and much of our work in this area in the short term will focus on those vulnerable consumer groups of pensionable age, due to the particular risks this group may face in coming years.”

In December, the FCA published a market study which found that providers were failing to abide by the Association of British Insurer’s code of conduct when it came to encouraging savers to look for the best annuities.

Following that work, the regulator says it will review whether providers have changed their practices for vesting customers.

The FCA says: “Our key objectives are to ensure that firms have stepped up and improved their practices since the publication of our thematic report in December 2014 and to ensure that firms do not seek to undermine or circumvent the Pension Wise service for the purposes of retention.”

In addition, the regulator plans to carry out a review into whether consumers are better off from the products and services they buy at-retirement.

The review will examine how the new pension freedoms are working post-April, and the effectiveness of the guidance guarantee.

Both advised purchases, in terms of advice suitability, and non-advised purchases, in terms of the information provided, will be in scope.

The review is expected to launch early next year.

FCA chief executive Martin Wheatley says: “The business plan is set against the backdrop of the most fundamental changes to pension policy we have seen in over a generation. Therefore we will be looking at how the market is working and in particular, how the industry is adapting to this considerable change and what it means for consumers. This is exactly the sort of work that is expected of the FCA, and I believe is a fundamental benefit to consumers and industry.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. The elephant in the room is that any guidance will either be seen by consumers as advice or so full of disclaimers it will be utterly pointless.

  2. So far all that is happening is increased cost to all including consumers as the regulator continues to fail to stop the scams. As for the comments about lack of guidance and advice, will they take any responsibility for this, not likely.

    Their recent move to change the required qualifications three weeks before implementation of the new pension rules, adding yet another layer of complexity and cost shows they have little regard for the people who have to deliver the advice and guidance.

    Our interim levies arrived yesterday demanding payment adding more cost to our clients to pay for others mistakes. All in all the last few weeks have really made us question at what point do we say enough is enough. I cannot just up my budget as unlike the regulator I cannot just demand more, I have to show value for money.

  3. Call a spade... 24th March 2015 at 11:08 am

    So now the FCA wants to regulate freedom? The point of the changes is that the consumer gets to choose how/when/where to spend their own pension money. Ever since it was announced, the industry has pointed out that some people will make choices that leave them worse off. That is in the nature of “freedom”. But the FCA now wants to spend a lot of money reviewing whether consumers are better or worse off, will find the obvious answer and will then, no doubt, blame the industry for those who are worse off.

  4. If Pension Freedom does all turn very nasty for consumers, the blame will lie more with the legislation, and in particular the short timescale given to implement it, than it does with the regulator and the regulated. If more notice had been given by the Government then everybody, the FCA included, would have had more time to put the regulatory, “guidance”, retirement product and advice frameworks in place. Even the FCA will need to concede that.

    I suspect the FCA are struggling with it all as much as the industry is.

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