The FCA has published an update for financial services firms operating in the pensions market. This represents an attempt to allow both the FCA and those firms to reprioritise resources towards preventing and reducing consumer harm during the pandemic, and provide pensions providers with additional information on how to deal with these risks in their customer communications given the current financial stress and market uncertainty.
In particular the update confirms that the FCA has extended the implementation date for the new income drawdown rules set contained in policy statement 19/21 (in so far as they are not already in force) for six-months; and also includes guidance on how firms should handle:
- income drawdown queries;
- requests to transfer defined benefit pots into non defined benefit arrangements (and the associated requirements); and
- communicating with customers without inadvertently straying into providing regulated advice,
for example by giving appropriate warnings where a customer is considering de-risking or otherwise switching investments, and providing balanced information to customers on likely questions and concerns raised by the current market volatility;
The update includes a useful table setting out the main risk factors that the FCA see as applying during the pandemic and is likely to be helpful for firms providing these types of advice in supporting their customers. Firms can take further comfort from the FCA’s statement that the Financial Services Ombudsman has confirmed that in the event of complaints it will be taking the content of this FCA communication into account when making decisions.