The FCA is bringing in new requirements for pension providers without consultation which will amount to a “second line of defence” for the Government’s flagship pension reforms.
The rules will come into effect on 6 April and aim to protect consumers who do not take up the offer of the guidance guarantee service.
When a customer contacts their pension provider to access their pension, providers must now ask the consumer about key aspects of their circumstances that relate to the choice they are making, such as health and lifestyle choices or marital status.
In a letter to the chief executives of providers today, the FCA says providers will be required to give relevant risk warnings, such as warning of the tax implications of their decisions, in response to answers from the consumer.
The requirements are in addition to an existing obligation on providers to point consumers to the Government’s Pension Wise guidance service.
FCA director of strategy and competition Christopher Woolard says: “The decisions consumers make about what to do with their pension pot are important and in some instances these choices are irreversible. We want to make sure that people have the help they need to make those choices.”
But as recently as October, the FCA said there will be no “backstop” to prevent people making poor decisions at retirement, arguing that existing rules already protect consumers.
Just Retirement group external affairs and customer insight director Steve Lowe says: “This was a gap that could have wrecked the reforms had it not been plugged.”