Most providers have coped well with the increased workload since 6 April, according to the Financial Conduct Authority, however it did raise some “operational problems” concerns in a market update.
Christopher Woolard, director of strategy and competition, stated that there were over 1m calls to insurers in the first month of the pension freedoms, representing an 80 per cent year-on-year increase.
“Most firms have coped well with this additional demand, but we also know there have been some operational challenges at a minority of firms.
“For example, telephone call wait times and abandonment rates were higher than all parties would have liked in April, although they have improved since that time and are continuing to improve.”
The FCA also said it was aware that some firms have had some operational problems delivering on customers’ instructions, whether they are to switch products or providers or access cash.
The most well publicised of these came last month, when Friends Life was forced to write to 1,300 customers who had requested partial pension withdrawals, telling them that the promised roll-out of a flexi-access drawdown option was no longer going to be take place due to the complexity of its pension back book.
The regulator’s supervisors have been collecting regular data extracts from providers representing 84 per cent of the market, finding that the majority of people have been able to take advantage of the new freedoms without any significant problems.
In the first three months, many of the people looking to access their pensions as a result of the new freedoms have smaller pots - typically under £50,000 and taken as cash.
“Early indications from our supervisors are that retirement risk warnings are being delivered and that call length for consumers has reduced from 10 minutes to 8.5 minutes,” Mr Woolard added.
He pointed out that pensions will have particular features within them, for example guaranteed annuity rates, which would cost considerably more than the value of the pot to buy today in the open market.
“It is therefore important that consumers understand those valuable features and take them into account in their decision making.”
In order to gather more market data, the FCA today (1 July) sent all pension and retirement income providers a request for information about any barriers faced by consumers who are seeking to access their pension savings.
As previously announced, the regulator is currently reviewing its pension rules and will be consulting later in the year where further changes are necessary. This will include reviewing retirement risk warnings and incorporating elements of the Association of British Insurers’ code of conduct on retirement choices into the rules.