The FSA is warning IFAs specialising in unlocking pensions at 50 that their marketing campaigns are unbalanced.
The regulator is writing to firms to express concerns that TV and press campaigns do not adequately describe the risks involved and the long-term effects of a reduction in pension income.
The FSA has written to senior management at around 10 firms saying the marketing of pension unlocking is emotive and light-hearted, with the effect of persuading consumers that the decision to unlock their pension is trivial.
It says firms found to have exposed customers to misleading promotions or inappropriate advice on unlocking will face enforcement action.
Director of investment firms David Kenmir says: “Releasing cash may sound very tempting but people need to stop and think about whether they really need to do it. It is rarely in anyone's long-term financial interest. Only in exceptional cases, where people have immediate needs and no other option, should they even consider doing it.”
Hornbuckle Mitchell Group director Viv Belcher says: “I have been surprised that the advertisements have carried on in the way they have but people will be tempted out of desperation. There will be situations where it is appropriate for high-net-worth individuals who get face-to-face advice but for people doing it through the post it seems too easy.”