On 30 July 2019, the FCA published a package of pension related proposals designed to improve the quality of pension transfer advice and to help consumers get better value from their pension. These proposals include:
- consultation paper (CP19/25) setting out a proposed ban on contingent charging for pension transfer advice designed to protect customers from the conflicts of interest which arise where a financial adviser only gets paid if a transfer goes ahead. The FCA is also looking to address the conflicts of interest which arise where a financial adviser advising on a pension transfer stands to receive ongoing fees – which in some cases can be for 20-30 years following the transfer. The FCA has proposed that advisers will be required to demonstrate why any scheme they recommend is more suitable than the consumer’s workplace pension scheme. The deadline for comments on the consultation paper is 30 October 2019;
- feedback statement (FS19/5) setting out the issues identified from an earlier discussion paper (DP18/1) on effective competition in non-workplace pensions. The FCA found that many consumers are not engaged in pension decisions or aware of charges they are paying. The FCA has outlined a package of potential measures to protect consumers and is seeking feedback. It will then consult on new rules for non-workplace pension schemes in early 2020; and
- policy statement (PS19/21) setting out the final rules and guidance on the final tranche of remedies arising out of the Retirement Outcomes Review. The FCA’s new rules and guidance: (i) introduce ‘investment pathways’ for consumers entering drawdown without taking advice; (ii) ensure that consumers entering drawdown only invest mainly in cash if they take an active decision to do so; and (iii) require firms to send annual information on all the costs and charges paid over the previous year to consumers who have accessed their pension. The new rules and guidance come into force on 1 August 2020.