Personal Pension  

Product innovation ahead of April sadly lacking: FCA

Product innovation ahead of April sadly lacking: FCA

Major product innovation in the approach to April’s pension changes has been lacking, David Geale, the FCA’s director of policy has claimed.

Mr Geale said: “It is still relatively early days. What we have seen so far is a variation on an existing thing rather than anything new.

“We do expect that to develop over time. There is no particular product suite we want to see - what we are looking for is a competitive market.”

Article continues after advert

Mr Geale, who was speaking at an industry event about April’s pension changes, warned that greater choice for consumers could lead to an increase in risk and the need for guidance or advice.

He said: “It is fairly clear that people will still need help. The greater amount of choice they have, the greater amount of risks there are, the more help they will need.”

Mr Geale also sought to reassure people that regulators and the government were working together in preparation for the reforms.

He said: “In terms of the DWP and the Treasury, I think we are talking to them and The Pensions Regulator daily, on a whole range of issues but largely about the retirement reforms.

“We are working very closely with the government on these particular issues.”

When asked to give a summary of how the Pension Wise scheme would be run, he said: “The Treasury is responsible to make sure it works. It’s our responsibility to make sure it works properly.”

He also said firms would be asked to give consumers personalised risk warnings, tailored to their circumstances.

He said: “As an example, if somebody asked to take the cash the firm must ask whether they have alternatives means of income should they run out.”

But Mr Geale stressed that this did not count as advice, adding: “It is about indications and tailored risk warnings - not advice.”

Adviser view

Matt Raine, financial consultant for Leicestershire-based TM Asset Management, said: “There is a slow development of products, but my feeling is the industry is holding off until the changes come to fruition in April.”