Regulation  

FCA may consider using IFAs to ‘test’ Pension Wise

FCA may consider using IFAs to ‘test’ Pension Wise

The Financial Conduct Authority may consider using financial advisers to review Pension Wise in the future, David Geale, the FCA’s director of policy, told a group of MPs.

In a session with the work and pensions committee on pension freedoms guidance, Mr Geale was asked whether the regulator has used IFAs to conduct reviews of the guidance or whether IFAs could do a regular audit.

Speaking on the testing of the service so far, Mr Geale said: “We have not used IFAs to do a blind test”, stating that there is currently no “cause for concern” about Pension Wise.

“We have not used IFAs to review outcomes but that is not something we would [usually] do.”

He added that many of the FCA’s staff are ex-IFA’s, “himself included”.

“We have reviewed them against the standards we would look at in our own supervisory processes.”

Mr Geale highlighted that in some cases the regulator used consultants and “for others we use ourselves based on the frameworks we build and the experiences that we have”.

“I take your point, maybe it is something we could do in the future - we’ve not used IFAs to review our services as yet.”

Meanwhile, MPs also heard that the FCA has received 160 complaints about pension introducers in the last two years and is taking forward four “test” cases, however it has not seen a “spike” in scams since the pension freedoms were implemented.

Chris Woolard, director of policy, risk and research at the FCA, who was also giving evidence said: “160 have gone into the assessment process where enforcement will assess merits of it, whether it’s our jurisdiction or for the police and five with ongoing operations.

“At the moment we are in a position where we have sufficient resources and good level of co-operation with the City of London police.”

A FCA spokesperson told FTAdviser that the FCA is taking forward four test cases.

MPs also raised concerns about unregulated investments and scams.

Mr Woolard said: “The big issue is that people are based overseas and are using the internet as the main means of contacting consumers.”

He warned that this brings up jurisdiction issues but as soon as the regulator becomes aware of “fake websites”, it works with the internet provider to take it down “but clearly this is a cat and mouse game”.

Mr Woolard said the regulator’s main tool is educating consumers - pointing to its Scam Smart campaign, “so that when people get approaches [by scammers] they are alert”.

MPs also questioned whether removing annuities being the default retirement product for the majority of people would boost the amount of scammers, however Mr Woolard said this was not the case.

He said: “What we are seeing is that this is clearly a very attractive target for scammers. People who might otherwise be spending their time phishing bank account may think about posing as a fake pension provider. We are seeing activity in this area but it is not causing more people to come in as fraudsters.”