The Financial Conduct Authority (FCA) has published proposed changes to the rules on pension freedoms a day after new complaints figures.
As new figures reveal that the number of complaints made to pension companies increased by nearly a fifth in the first six months of the year, the FCA has outlined proposed changes to its pension rules to tackle the risks and challenges faced by consumers in the new retirement market.
Life and pensions firms received 73,055 complaints about their products in the six months to June 2015 – an increase of 19.7% compared to the previous six months.
The pension changes that came into force in April 2015 allow people greater flexibility to access their money and greater choice in what they then do with it. However, the process hasn’t always been smooth, with people facing delays and the need to switch contract or provider to get their preferred option.
Find out more: What the pension changes mean for you – read our guide
Most complained about pension companies
Prudential was most the complained about firm in terms of life and pensions products with 8,827 complaints, followed by Friends Life (7,013), Royal London (5,688), Aviva (4,342) and Scottish Widows (4,110).
Which? executive director Richard Lloyd said: ‘It’s worrying to see such a big rise in complaints about pension companies. If the freedoms are to be a success, it’s important that firms play their part in helping people access, and make the most of, their hard-earned savings.
‘The regulator should work with the government to identify where firms are falling down and take action to ensure people are treated fairly.’
Regulator to consult on pension freedoms
The consultation paper published by the FCA today proposes a series of measures to improve the way that consumers are informed about how they can access their retirement money.
Among the proposals from the FCA are new requirements to help consumers shop around, measures to ensure that consumers have the information to make informed decisions and a discussion around the remuneration arrangements for the non-advised purchase of annuities.
Pension pots below £10,000 will not be subject to the FCA’s new ‘second line of defence’ rules. When the rules were originally announced in February 2015, providers had to deliver the warnings to every customer but now this will only apply to pots above £10,000 or if policies include safeguarded benefits.
The consultation on changes to pensions regulation also proposes a commission cap, or even a ban, on non-advised annuity sales. The FCA is also providing guidance for debt management firms who may be pressurising people into using their pension pot to pay down debt.
- Income options for your pension under the 2015 rules – how you can access your pension
- Pensions and retirement – our comprehensive guide to managing your retirement money
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