On 4 May 2021, the FCA published Consultation Paper 21/11: The stronger nudge to pensions guidance (CP21/11).
Section 18 of the Financial Guidance and Claims Act 2018 (the Act) amends the Financial Services and Markets Act 2000 requiring the FCA to make rules for pension providers to ensure consumers have either received or opted out of receiving Pension Wise guidance when they apply to access or transfer their pension savings. To implement this requirement the FCA proposes in CP21/11 that, when a consumer has decided, in principle, how they wish to access their pension savings, or transfer rights accrued under their existing pension to another pension provider for the purposes of accessing their pension savings, pension providers must refer the consumer to Pension Wise guidance, explain the nature and purpose of Pension Wise guidance and offer to book a Pension Wise guidance appointment.
The FCA also proposes to require providers to confirm and record whether the consumer:
- declined the offer to receive the Pension Wise guidance (opted out);
- received Pension Wise guidance; or
- received regulated advice.
When consumers contact their provider to access their pension savings (or transfer for the purpose of accessing their pension savings), the provider will be required to refer the customer to the availability of Pension Wise guidance, explain what Pension Wise guidance is (its nature and purpose), explain that the customer can seek regulated advice, and offer to book the customer a Pension Wise appointment. The stronger nudge to Pension Wise serves as a final nudge in the consumer journey.
Further details on the FCA’s proposals are set out in Chapter 3 of CP21/11.
The FCA also intends to collect data from pension providers to support supervision of the proposed rules, and help both it and industry understand consumer behaviour, including the reasons why people might choose to opt out from Pension Wise guidance. In Chapter 4 of CP21/11 the FCA asks what more can be done to increase take-up of Pension Wise guidance.
The deadline for comments on CP21/11 is 29 June 2021.
The FCA will consider the feedback it receives and seek to publish a final Policy Statement in Q4 2021.