Pensions minister Steve Webb has questioned the FCA over what controls are in place for people who do not take up the offer of the Government’s “free” guidance guarantee.
Speaking at a House of Commons Pension Schemes Bill committee hearing this morning, the regulator told MPs there are currently no safeguards if people choose not to use the guidance.
Money Marketing recently revealed just 2.5 per cent of people took up the guidance when offered it as part of a pilot, although TPAS estimates 25 per cent will from April next year.
Webb said: “There’s an alternative scenario. Someone doesn’t access the guidance at all – take up won’t be 100 per cent.
“Say my provider does their bits – tells me guidance is available – and I don’t take it up and then make my retirement choice. Is there a need for a second defence so I have to sign something that says ‘I’m married and I realise my widow will get nothing’?”
FCA director of policy David Geale said the issue might be looked at in the future and questioned the lengths the industry should go to push people into using the guidance:
He said: “How far do we want to take people who haven’t taken what’s available and say ‘are you really really sure you didn’t want to take up the guidance?’ That’s a question we need to look at as the guidance guarantee comes into play.”
Webb also asked about the FCA’s powers to intervene and block “flaky” products rather than just “clearing up the mess after things have gone wrong”.
FCA director of policy, risks and research Christopher Woolard confirmed the regulator does not pre-approve products but does have powers to take early action.
He said: “[The powers] can either be to move to an immediate ban of the marketing or the complete sale of a product, on a permanent basis or a temporary banning power up to a year while we work out whether something’s really gone wrong”, he said.
Geale added he was not expecting a surge of new products in April, but that providers were instead “looking to plug gaps in their own range”.