The City-watchdog is probing advisers on their retirement income advice records by sending a number of information requests to randomly selected advice firms, FTAdviser has learned.
The letters ask advisers to provide data on their clients who are receiving income in retirement, specifically: the advice given, how the client was receiving income, what ongoing advice was being provided and what fees were charged.
FTAdviser understands advice firms received the letters from the Financial Conduct Authority around mid-January and were given a deadline of yesterday (February 13) to supply the data.
The FCA asked the firms for data on all the retirement income advice recommendations made over the past two years.
The letters form part of the regulator's fresh crackdown on the advice market it had warned about in a letter sent to advice firms last month.
The sharp focus on retirement income advice suggests the FCA is moving its beady eye away from the defined benefit transfer market and towards the potential conflict of interest created in retirement income advice, experts have warned.
Mike Barrett, consultant at the Lang Cat, said: “The FCA is looking at the conflict of interest in the options somebody could be going into at retirement in their early 60s.
“They could get advised to go into something that’s not hugely complex but complex enough to pay the 1 per cent fee and therefore, the adviser gets paid.”
Mr Barrett said it was not that such a solution was the “wrong thing fundamentally” but more about whether the clients' needs could be addressed with something less costly.
He added: “The regulator is moving quite quickly on this. These requests were sent out around the same time as the portfolio letter."
Mr Barrett said the advice firm he had spoken to had been in a “mad rush” to compile all the data in such a short amount of time.
The FCA refused to comment but it is understood the regulator will look at the root causes of poor advice throughout the suitability review and that it is working from the starting point that poorly managed conflicts of interest can result in consumer harm.
Part of the FCA’s suitability review will be about ascertaining whether conflicts of interest were a fundamental, real issue in the retirement income advice market.
Neil Walkling, a consultant at Bovill who had also been contacted by an advice firm about the request, said: “It seems the FCA is concerned about the quality of advice in more complex advice situations.
“The regulator suspects a repeat of DB where some advisers could be tempted to generate ongoing advice fees.”
Mr Walkling thought the FCA was using this data probe to create a sample of cases to review to ascertain whether conflicts of interest was a real issue in retirement advice.
A support services company FTAdviser spoke to said it had also been contacted by a number of advice firms regarding the letter.
imogen.tew@ft.com, additional reporting by Rachel Mortimer
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