The Financial Conduct Authority’s (FCA) have chosen to include pensions and long terms savings as a key areas of focus in its 2018/19 business plan.
Set out as one of their cross sector priorities, the regulator states their work in this area covers a wide range of issues surrounding the evolving population and their respective needs. It makes a point of highlighting that for some older customers, this is currently not the case, ‘resulting in exclusion, poor customer outcomes and potential harm’.
After going over the societal changes which are impacting saving growth, the regulator sets out four key activities, outlining the steps it has already taken as well as the measures it will undertake.
This includes their Retirement Outcomes Review, with the FCA stating that since the publication of the interim report, further feedback has been received, with the regulator having analysed the various kind of harm caused as a result certain investment charges for example. They state that a final report, alongside a Consultation Paper on proposed remedies, will be published this year.
The second measure highlighted related to the changes made by some firms following the pension reforms. These have, according to the FCA, could cause harm to some consumers. The regulator warns that if they see evidence of firms providing unsuitable pension advice, they will not hesitate to intervene.
Conclusively, the final two activities in this relation to this section of the plan look at savings adequacy work and competition across the non-workplace pensions market.
The former relates to research to be carried out by the FCA, which will look at the levels of retirement undersaving.
In terms of increasing competition in the non-workplace pension market, the FCA state that their diagnostic work to better understand the market is ongoing, with a particular focus as to whether the issues identified in the market for workplace pensions are present in the non-workplace pension market. They also set out their intention to look at whether there are barriers for consumers in comparing products, the differences in the pension markets as well as if providers are competing on charges.
Sharing his thoughts on the plan was Tom McPhail. The Hargreaves Lansdown Head of Policy welcomed the FCA’s decision to focus on financial planning on a long term basis, stating: “There’s a strong case to be made for extending the FCA’s statutory remit beyond its current three objectives, to include an additional provision around actively seeking improvements to individuals’ long-term financial well-being. In the meantime, a paper looking at savings adequacy will be a step in the right direction.”
The document can be accessed here.
