The Financial Conduct Authority (FCA) has announced a review of the retirement advice given to pension savers. The review will look at “the advice that consumers receive around retirement income.
The FCA said due to the “greater number of options now available in retirement planning”, it is imperative that savers “get good advice at the point they access their pension savings and, if necessary, going forward”.
Following the review, the FCA is aiming to publish a report later in the year with its findings. It stated that the review was a “key element” of its wider financial advice strategy.
“Most investors need help in making good retirement decisions, both at the point of retirement and in the subsequent years.”
According to the FCA, its other key priorities include work on defined benefit pension transfer advice, targeting pension and investment scams, and focusing on firms holding adequate financial resources and professional indemnity insurance.
Debbie Gupta, director of life insurance and financial advice supervision at the FCA outlined five key areas of risk firms need to monitor:
- Authorised firms receiving introductions from introducers or lead generators, particularly, where the introducer has inappropriate influence on how the authorised firm carries out its business, such as where the introducer influences the final investment choice;
- Authorised firms delegating regulated activities, particularly where they outsource their advice process to unauthorised entities or other authorised firms that do not have the relevant permissions, or are not their appointed representatives;
- Principal firms having inadequate oversight of their appointed representatives;
- Authorised firms failing to undertake adequate due diligence on products and services they recommend; for example, non-standard, illiquid investments; and,
- Investments containing non-standard assets, complex structures and/or high charges.
Tom McPhail, head of policy at UK investment platform Hargreaves Lansdown said: “Consumer protection at and in retirement continues to be a significant challenge for the FCA in the post pension freedom world.
“They’ve done a lot of good work through the Retirement Outcomes Review but there’s still a lot more to be done.
“Most investors need help in making good retirement decisions, both at the point of retirement and in the subsequent years.
“The review is likely to take a close look at suitability reports and also at the cost and benefit of ongoing advice given to investors in the years after retirement.”