The PIA is to crack down on income drawdown with a sweeping review early next year of the way the product is sold.
The review has sparked fears that the PIA could fine and suspend advisers found to be non-compliant in the way they sell drawdown – one of the most complex areas of retirement planning.
In a move which would split the pension industry, the review could also lead to drawdown becoming a permitted activity. The investigation follows industry pressure for the PIA to look into the product as experts fear a possible misselling scandal.
The PIA's inaction prompted the IFA Association last week to start drawing up its own guidelines for IFAs conducting drawdown business.
But now a PIA spokeswoman says: "We are looking into how the product is being sold. Once the investigation is complete, we will announce what we should be doing to clean up the situation."
Under normal PIA rules, members found to be non-compliant can face sanctions including fines and expulsion.
Kangley Financial Planning managing director Geoff Kangley says: "I expect the PIA to take action against firms not selling drawdown in the right way. This is a timebomb ticking and it will not go away."
Commercial Union pensions technical development manager Iain Oliver says: "There are a number of advisory issues that need to be looked at. The PIA should look at these also when it looks at drawdown sales."
Life offices, including Standard Life, Winterthur Life and Britannia Life, are concerned over sales of drawdown and have urged the PIA to make it a permitted activity.