Policy submission
The FCA’s consultation on adapting our requirements for a changing pensions market - Which? response
Which? response to the Financial Conduct Authority's (FCA's) consultation on adapting our requirements for a changing pensions market (CP 25/39)
2 min read
- We support the proposals for both a new regime for interactive digital pension planning tools and added friction in the non-advised transfer process. These interventions are proportionate and sensible responses to well-documented areas of consumer detriment. By focusing on outcomes while maintaining prescriptive constraints in high-risk areas, the FCA has created a framework that makes the space for industry innovation, while maintaining essential consumer protections.
- It is also positive to hear that the FCA has engaged with the FOS throughout the development of these proposals. As these proposals develop further, continued discussion between the FCA and the FOS will be important. We also see it as critical that any outcomes from this continued engagement are made public.
- Tools and modellers: We agree with the proposed regime for digital tools, noting that consumers highly value interactive ways to model their retirement. Moving forward, we recommend that the FCA consider whether there’s a need to better ensure clear differentiation between digital pension planning tools, static illustrations, and other projections to prevent any risk of consumer confusion or misunderstanding. We would also like the FCA to provide more clarity on how this new regime will affect non-FCA regulated firms who provide tools and modellers for in-force pensions (e.g. trust-based schemes).
- DC to DC transfers: We strongly support the FCA’s proposal to introduce additional friction into the non-advised transfers process as this is currently a clear area of consumer detriment. We particularly support implementing these changes now, rather than waiting for the full rollout of Pensions Dashboards, and the 10-daytimeframe for ceding firms to provide the relevant information. In continuing to develop these proposals, we recommend that the results of behavioural testing should be shared with industry to support the design of the presentation of1information back to consumers. We also urge the FCA and the TPR to work together to ensure that this regime applies to all non-advised pension transfers, not just to those involving FCA-regulated pensions.
- Lastly, while the flexibility of an outcomes-based approach is a positive step, we do want to underline that its success depends on rigorous supervision and enforcement. Without active monitoring, there is a risk that firms do not implement the new regimes in the way the FCA has intended. If these proposals are implemented, we would also see value in the FOS proactively sharing any emerging poor practice with the FCA to support their supervisory efforts.
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