In its business plan for 2017/2018 released on Tuesday, the Financial Conduct Authority (FCA) said it wants to see increased competition and innovation in the pensions market, and is particularly seeking to engineer decumulation products that offer good value for money.
“We will focus in the future on how people access their pension savings following the [pension] reforms. We will also be focusing on non-workplace pensions and continue to educate consumers about pension scams,” the regulator said in the business plan.
On drawdowns, the FCA said: “We will review the sales processes and ongoing communications of a sample of firms making non-advised drawdown sales since the pension freedoms were introduced.
“We will assess whether firms are complying with our rules by giving customers adequate information to make an informed decision when they decide to draw down their pension.
“We will undertake the next phase of our ScamSmart campaign to reduce both pension scams and the number of consumers falling victim to them.”
“We will also examine if firms give their customers adequate post-sale information to enable them to continue to make decisions that support good outcomes,” it said.
Pension market issues
In the pension market generally, the regulator said it was concerned that consumers could not, or did not want to get, adequate advice and guidance to make the best choices for saving for their retirement. It was also worried about the lack of new service providers entering the market, and the fact that consumers cannot compare pension products as information on product features and costs was hard to understand.
Later in 2017 the FCA plans to unveil a new strategy for the pensions sector, and will set out its regulatory approach.
“Our strategy will also explain how we work with other regulators and government to further our objectives and identify areas where further progress is needed,” it said.
Retirement review
The FCA is also planning to reveal the findings from the Retirement Outcomes Review, which began in July 2016.
This review looked at how consumers made choices to access their pension savings without using an adviser. It also considered whether consumers were shopping around and switching to products that better meet their needs. And it looked at how firms have changed their business models and the impact of these changes on competition along with other factors such as the pace of regulatory change.
The FCA will publish an interim report in the summer of 2017, followed by the final report at the beginning of 2018. These reports will propose a package of remedies to improve competition to benefit consumers.
These remedies will include steps the FCA plans to take in the future to help consumers who do not get financial advice.
More rules
The FCA also said it was considering new rules on shopping around and switching pensions. It has already proposed requiring annuity providers to tell their customers how much they could gain from shopping around and switching provider before they buy an annuity.
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