The Financial Conduct Authority is launching a review into retirement income advice to explore how financial advisers are delivering this and to check the quality of outcomes received by consumers.
The thematic review is expected to be launched in Q1 2023, with a report on the findings to be published before the end of the year. It will contact a range of advice firms and trade bodies to undertake the discovery work.
The regulator says the review has been prompted by the introduction of the government’s pension freedoms in 2015, which has led to many more consumers using pension drawdown to provide their retirement income, leaving their pension pots invested in the market.
The watchdog acknowledges that retirement income advice can be complex and says firms must understand the needs of their customers to ensure that they deliver consistently suitable advice. The regulator is planning to link the review to its work on lifetime mortgages, which it announced in its 2022/23 business plan, so it can get a clearer understanding of outcomes for consumers in later life.
James Burgoyne of Brunel Professions said: “While the FCA is treating this as an information gathering exercise at this stage, it is starting to focus its attention on money purchase pensions following its work in the defined benefit market. Advice on drawdown is complex and risks consumers running out of money if they take too much from their pension pots too soon. Advisers should take this as an opportunity to review their approach to retirement income planning and make sure it reaches the standards expected by the FCA under the new consumer duty.”
The FCA has published a press release about the review on its website. News reports about the move have been published by Pensions Age and FT Adviser.
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