The FCA has asked the pensions industry for ideas on which regulatory barriers could be removed to tackle the issue of insistent clients.
In a 108-page consultation paper on the pensions market following April’s reforms the FCA acknowledged there was still concern about the regulatory backlash of helping clients do something contrary to advice, despite the regulator’s attempts to reassure the industry.
The paper, called Pension Reforms – Proposed Changes to our Rules and Guidance, said the government had now expressed concern about industry anxiety preventing consumers from accessing the pension freedoms.
It said: “In July 2015, we requested data from all pension and retirement income providers, including DB to DC transfer data.
“The data collected highlighted that many providers will not accept insistent client pension transfer business and some providers will not accept any DC transfer business.
“We recognise that in a similar way to advisers, providers are at liberty to decide what business they accept.
“However, we would welcome views from providers on the perceived regulatory barriers to accepting transfer business, including insistent client business and non-advised business.”
The paper also proposed action in a number of other areas, including non-advised annuity sales.
Data from the ABI showed around 189,000 annuity contracts were written in 2014. Of these, 132,000 were sold without advice.
While the FCA said it did not have comprehensive data on commission rates paid on non-advised annuities, it did claim there was anecdotal evidence that commission payments could exceed payments for an advised sale.
The paper said one of the options would be for the FCA to restrict commission on the non-advised sale of annuities.
| The FCA’s proposals |
The retention of rules on the retirement risk warnings, but the removal of the requirement for a firm to go through the question and answer process when a consumer has a pension pot of £10,000 or less and where there are no safeguarded benefits Guidance on the content of wake-up packs and proposed banning application forms being sent out with them Amending the ‘certified high net-worth investor’ and ‘restricted investor’ certification criteria so, except when they serve as income in retirement, lump sum pension withdrawals are expressly excluded from the HNWI income criteria and money released from pensions as cash is excluded from the definition of net investable assets for the purposes of HNWI and RI certification. |
Yvonne Braun, the ABI’s director of long-term savings policy, said: “Following the biggest changes to private pensions for a generation, the retirement income market has adapted well, but we must ensure that customers are protected and can get the best outcome for their retirement.
“A more fundamental look at retirement communications is needed, taking into account the important work the FCA is doing in general on customer communications and disclosure.”
Adviser view
Darren Cooke, a financial planner with Derbyshire-based Red Circle Financial Planning, said: “It is difficult because on the one hand you can say that it is the client’s money and they should do what they want, but if they want to do something stupid should you be protecting them?
“I am not sure, and the messages we have been getting from the FCA and PI insurers has been confused.”
