Regulating the providers of the Government’s at-retirement guidance service will cost the FCA as much as £975,000 in the first year, a cost-benefit analysis from the regulator reveals.
The FCA has today set out details of how it will regulate those delivering the Pension Wise service, which is designed to support wide-ranging reforms to pensions coming into effect on 6 April.
The Pensions Advisory Service is delivering the telephone aspect of the service, while Citizens Advice is delivering face-to-face sessions and the Treasury is leading the online service.
The service will be funded by an annual £35m levy, of which £4.2m will be paid by advisers.
The FCA says regulating the guidance providers will incur one-off costs of between £375,000 and £562,000, and ongoing costs of between £263,000 and £395,000 per year.
It estimates that the compliance costs for the providers will be as high as £566,000 in the first year.
It says providers will incur one-off compliance costs of between £295,000 and £468,000, and annual costs of between £56,000 and £98,000.
An FCA spokeswoman says all costs will be included in the £35m levy.
The FCA says it will use regulatory tools including mystery shops and site visits to monitor the providers.
Providers will have to meet a series of FCA standards, which include reporting complaints to the regulator, delivering the service in a “timely” manner and having systems, controls and records to demonstrate compliance.
It says it will collect and analyse data from the providers on a regular basis, carry out site visits, conduct mystery shopping exercises and other consumer research, and carry out detailed reviews of specific issues, which will be similar to its thematic supervision approach.
In the event of non-compliance, the FCA says it will be able to make recommendations to the providers and the Treasury. It says its enforcement powers are not as extensive as for other regulated firms.