FCA is consulting on measures to improve retirement outcomes for consumers. Its concern is that consumers are using the pensions freedoms to move into drawdown and hold funds in investments that will not meet their needs. It feels consumers focus only on taking their tax-free cash and take the easiest method available to drawdown. To combat this, FCA is proposing “investment pathways”, which it wants firms to offer to customers who do not take advice, and which are designed to offer a range of solutions that will broadly meet their objectives. The pathway will take customers to choices, and they will need to choose from four objectives. FCA will look closely at charges and will consider imposing a cap if it thinks firms are charging too much for this service. But it will allow smaller firms to refer investors to another provider or the SFGB’s comparator tool.
FCA is also now making rules on amending the packs (“wake-up packs”) that firms should give consumers nearing retirement, and consulting on charges disclosure.
FCA seeks views on the proposals by 5 April. The changes to the wake up packs, and the rules on risk warnings, reminders and prompts will take effect on 1 November, and changes to make comparisons easier and the cost of drawdown products clearer will come into force on 6 April 2020.