These comments come in response to the FCA-proposed remedies to improve retirement outcomes in the UK.
The investment pathway is one of the first solutions to be proposed by the FCA to protect consumers and help them make better retirement decisions.
The AMPS says it is in agreement with the regulator that more needs to be done to engage consumers with their pensions. But it questioned whether the FCA proposals are the right way to achieve this.
In its offical response the AMPS – which represents both Sipp operators and SSAs practioners – it says: “Investment pathways are likely to be neither appropriate nor suitable for many of our members’ customers and as such we disagree with the high-level thinking set out within the paper on this potential remedy.
“In our experience, consumers generally have an adviser in place to assist with their retirement and investment decisions, but they should not be forced to seek drawdown advice in order to take benefits.”
It adds: “Investment pathways rely on broad assumptions, creating the risk that these are too simplistic and actually lead to poorer customer outcomes as clients may not engage sufficiently.
“If consumers see drawdown as a simple default option, they may well select an option without appropriate consideration and end up with an inappropriate investment solution.”
A significant concern for AMPS is the fact that drawdown appears to be viewed as a distinct product, when within the Sipp industry this is simply a standard feature of the Sipp product.
Its response adds: “It is difficult to fully assess the extent of the implications of this investment pathways proposal on providers but if the proposals around investment pathways are to be implemented it is strongly recommended that Sipp operators are excluded on the basis that the risks identified do not exist to anywhere near the same extent within the Sipp sector.
“Many Sipp operators do not have the permissions, products or experience to provide these investment pathways at present. The cost and time required to develop these solutions would be substantial and at this stage extremely difficult to assess.”