Regulator to investigate pensions advice in 2015/16
FCA chief executive Martin Wheatley says the pension reforms are fundamental changes which will need looking into.
A wide range of reviews into the sales and advice in the pensions market will be a key feature of the FCA’s work over the next year. The City watchdog this week published its 2015/16 business plan, which sets out the work it will do over the next financial year.
Among the areas the FCA will be investigating are the sales practices of pension providers and a review of how the pensions market is working following the upcoming reforms.
Mr Wheatley said: “The plan is set against the backdrop of the most fundamental changes to pension policy we have seen in a generation. Therefore we will be looking at how the market is working, how the industry is adapting to this considerable change, and what it means for consumers.”
The 83-page business plan said: “From April 2015 we will scope and plan a follow-up to the market study into the outcomes consumers receive from the products and services they buy at retirement.”
It will review how well the market is working after the reforms and the guidance guarantee have been introduced, in particular after the full pensions flexibilities are introduced in April 2015.
The FCA will examine advised purchases (reviewing the suitability of advice given) and non-advised purchases (reviewing the information provided), and will launch this work in early 2016.
The body also intends to look into inducements and conflicts of interest in the retail investment advice sector, and carry out a review into how the mortgage market is working.
In the plan, the FCA’s annual funding requirement will be increased by £35m to £481m – an increase of nearly 8 per cent.
This increase has been put down to the implementation of the Alternative Investment Fund Managers Directive which sets out a Europe-wide regulatory framework for AIFMs.
£148.3m of this money – 30.8 per cent – will be paid by investment, mortgage and general insurance intermediaries.
Details of the FCA’s restructuring, due to come into effect from April, were also announced, with the creation of two divisions to undertake supervisory and authorisations work, each led by a director who will sit on the executive committee.
Supervision investment, wholesale and specialists will be led by Tracey McDermott, while Linda Woodall will head up the retail and authorisations division as acting director.
| FCA’s plans: facts and figures |
| The FCA regulates around 73,000 firms – three times more than in 2013/14. |
| Next year it will be starting 14 studies or reviews |
| The FCA’s annual funding requirement will increase by 7.9 per cent in 2015/16 to £481.6m |
| Once its restructure is complete there will be five divisions, each with a director on the executive committee plus the chief executive. |
Source: FCA
Adviser view
Phil Stevenson, director of Cheshire-based Ark Financial Planning, said: “My understanding is that advised sales of pension products always end up with better outcomes than non-advised sales.
“I don’t have a problem with the FCA looking into this issue if they come up with something reasonable.”
