The Financial Conduct Authority said it is "increasingly turning" its focus to retirement income strategies following its work on defined benefit pension transfers in recent years.
The FCA’s department head for advisers, wealth and pensions, Nick McGruer, said his team was currently in the "evidence gathering stage” due to concerns over the size of the retirement income market and those consumers with less wealth or drawing down large sums for the first time.
We are increasingly turning our focus to the decumulation part of the customer journey.Nick McGruer, FCAAt the Lang Cat Home Game event in Edinburgh today (October 5), McGruer said: "We've got concerns about drawdown on the basis that this is an area that is still relatively new, post-2015.
“It’s still something that we’re getting more evidence about. And it’s an area where people have to make difficult decisions and they’re often individuals who don’t have wealth. Or this is the first time they are confronted with a difficult decision about a large amount of money.
“It’s something that, at the moment, I’m signalling that we’re interested in and at the evidence gathering stage.”
McGruer added that the FCA is not seeing “particular harms across the market in this space”, but because of the size of the market, the amount of money, and the decision making process, it is something the regulator is keen to understand more about.
Around 596,080 pension plans were accessed for the first time last year, according to the FCA's latest data.
McGruer said for the past four or five years, the FCA’s focus has been on defined benefit transfer schemes, citing his team’s work on the British Steel Pension Scheme (BSPS) scandal.
The regulator is currently finalising a redress scheme for those who lost thousands of pounds due to poor advice.
“Clearly a lot of our effort as an organisation has been focused, more recently, on looking at defined benefit pension transfer advice, including the work on the BSPS folk who transferred out between 2017 and 2018,” said McGruer.
“But we are increasingly turning our focus to the decumulation part of the customer journey. So expect us to be looking more closely at retirement income strategies.”
ruby.hinchliffe@ft.com
