Regulation  

’FCA will not decide if pension decision was good’

’FCA will not decide if pension decision was good’

It is not the FCA’s role to decide whether a decision taken under the upcoming pension freedoms is good or not, a senior official from the watchdog has said.

Maggie Craig, the acting head of the City watchdog’s head of savings and investment division, was speaking at the launch of a new report into consumer attitudes towards pensions.

The 23-page report by the International Longevity Centre UK - called Making the System Fit for Purpose - was launched at EY’s headquarters in London.

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It found nearly 70 per cent of all those with defined contribution savings wanted a guaranteed income, particularly an income protected against inflation.

Ms Craig made it clear that if someone has a decision after receiving the free guidance then they are liable for the outcome of that decision.

She said: “We need to remember that Pension Wise sits in a different regulatory world and it is not part of the regulated advice world.

“If customers go on to take financial advice then they move into the regulated advice world.

“In our near final rules we are absolutely making it clear to providers that they have to encourage people to shop around and if someone says they have not taken the guidance guarantee they have to recommend it.

“Ultimately we need to be a little bit careful in our infinite wisdom of dictating what is a good decision for any individual customer.”

Ms Craig suggested consumers may have a different understanding of what advice entails, but added “rather than getting hung up on this we need to talk to the consumers about what the guidance will do and what it will mean”.

Adviser view

Simon Mansell, managing director of Worcester-based Temple Bar Independent Financial Advice, said: “So what the regulator is saying is that there is no such thing as a defined outcome but if you follow our ‘guidance’ then it is buyer beware.

“If you take advice, even if that advice has the same outcome as regulated guidance, then liability still rests with the adviser.

“One would hope that if the advice reflects regulated guidance then the regulator would be inclined to say on the balance of probabilities, whether that advice would be considered correct should a complaint result.

“If not then this seems to be a classic example of the same old retrospective regulation that has blighted the industry for years.”