FCA sticks with £950k plan to monitor Pension Wise

FCA sticks with £950k plan to monitor Pension Wise

The Financial Conduct Authority has found broad industry support for its plans to keep an eye on the Pension Wise guidance providers - despite the plans coming with a £950,000 price tag.

In a policy statement published this morning (3 July), the regulator stated that its consultation found the need for no major changes on the policy, other than requests for clarification of a few issues.

At the end of March the FCA stated it was likely to spend around £950,000 monitoring the compliance aspect of Pension Wise, the free guidance service set up to support those accessing the new over 55 pension freedoms.

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This included keeping tabs on guidance providers The Pensions Advisory Service and Citizens Advice Bureau, collecting their data on a regular basis and carrying out mystery shopping exercises.

As part of the exercise, the regulator published a consultation paper on its policy for making recommendations to the designated guidance providers and to the Treasury.

The policy paper revealed that comments on the wider monitoring process were generally supportive. “In particular there was agreement that we should allow for the differences in the delivery channels of the designated guidance providers in our monitoring approach,” it noted.

However, some areas were highlighted, such as the need to ensure that guidance providers understand the difference between guidance and advice, appropriate signposting of consumers to independent financial advice and the importance of training and expertise for those giving guidance.

There were also several queries about the expected format if designated guidance providers were to contest a proposed recommendation to the Treasury and if it would be possible to make oral representations.

In response, the FCA said it added to the policy that, in the event that it considers a shorter period is appropriate for designated guidance providers to respond to recommendations, it would aim to explain why this is the case and to discuss with the designated guidance provider any practical issues.

“In addition, we have added to the policy that if designated guidance providers wish to contest a recommendation we would expect this to be in writing, although we may also allow verbal representations at the discretion of the FCA senior staff committee.”

The FCA also clarified the policy that all information received as part of the monitoring process may be considered and if investigated could ultimately lead to a recommendation.

“Following a recommendation from the FCA to the Treasury, the Treasury may give a direction to the designated guidance provider,” the policy statement clarified, adding that such a direction is enforceable by law and therefore was not included in the policy.