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TPR clashes with FCA over retirement risk warnings limit

Lesley Titcombe

The Pensions Regulator has set itself on a collision course with the FCA after chief executive Lesley Titcomb suggested setting a £10,000 minimum for retirement risk warnings would be “problematic”.

Earlier this month, the FCA announced a relaxation of the new ‘second line of defence’ rules. As a result, contract-based pension providers will only need to give the warnings to customers with pots worth more than £10,000 or if policies include safeguarded benefits.

Previously, FCA-regulated providers had to deliver the warnings to every customer who wanted to access their pot using the pension freedoms.

TPR has not proposed a similar limit for the trust-based side of the market, however.

Speaking at the National Association of Pension Funds conference in Manchester this morning, Titcomb said: “Any sort of cap is always going to be problematic.

“We know that when the freedoms were first launched, the biggest eye-opener was about tax and a lot of people were not aware of the tax implications of taking their whole pot.”

Titcomb also admitted she is “disappointed” that only three pension schemes have signed up to its Master Trust Assurance framework, created to boost standards in the trust-based defined contribution market.

She said the regulator is considering pushing the Department for Work and Pensions to make the framework mandatory.

Titcomb said: “Making Master Trust Assurance compulsory is one of the things we could ask the Government to look at.

“We do have to look at the regulatory regime that applies to master trusts. It is a fast growing market and it is relatively easy market to enter.

“We are talking to the Government about this and we have identified it as a gap.”

Titcomb also warned of the potential risks posed to master trust members if a scheme runs into financial trouble.

She said: “The thing that does concern me is sustainability. There is no minimum capital requirement for master trusts, so if they do go out of business it could be quite messy.”

On a potential future merger of the FCA and TPR, Titcomb warned: “People would be deluding themselves if they think crashing the two regulators together would solve the problem [of different rules applying to trust and contract-based schemes].

“You would still be operating under different legislative frameworks and with different regulatory toolkits. It would be expensive and take a lot of senior management head time, and to be frank I’d rather concentrate on other things at the moment.”


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