On 19 January 2016 the Chancellor announced that the Government would introduce legislation to place a new duty on the FCA to cap early exit charges in certain pension contracts.

The FCA has published Consultation Paper 16/15: Capping early exit pension charges (CP16/15). In CP16/15 the FCA focuses on its approach to discharging the duty to be imposed on it to cap early exit charges for consumers accessing the pension freedoms. The primary legislation defines early exit charges and the purpose of the cap and the duty is narrowly focused on these charges. CP16/15 does not cover other charges that firms may apply during the lifetime of a pension policy and is not directly related to the recent FCA thematic review of the fair treatment of long-standing customers in the life insurance sector.

The deadline for comments on CP16/15 is 18 August 2016. The FCA plans to publish a Policy Statement confirming final FCA Handbook rules in autumn 2016, with a view to these rules coming into force on 31 March 2017.

Separately, the Department for Work and Pensions is consulting on a cap on early exit charges in occupational pension schemes.

View FCA proposes cap on early exit charges, 26 May 2016