The Financial Conduct Authority is proposing to simplify rules on personalised advice, potentially expanding access for consumers while reducing complexity for firms.
Nikhil Rathi, chief executive of the FCA, also confirmed in a speech at the JP Morgan Pensions and Savings Symposium the later life mortgage market needs to be developed in a way that meets consumers’ evolving needs, and that the FCA will be inspecting what changes might be required.
The FCA is launching a market study to examine whether change is needed to enable the lifetime and retirement interest only mortgage sector to meet consumers’ changing needs, driven by effective competition in the market.
According to Rathi, the FCA would also be exploring how consumers might be better supported to access more holistic advice and guidance on later life lending.
Targeted support, which allows firms to offer tailored product recommendations to groups of consumers with similar characteristics, goes live next month, and is intended to bridge the gap between generic guidance and regulated advice.
Rathi referenced the Association of British Insurers, which has said this could be ‘one of the most significant engagement shifts in pensions since auto-enrolment’.
The FCA also published its regulatory framework for targeted support in pensions and retail investments last month, having previously estimated that around 23 million consumers were being currently underserved by the markets for advice and guidance.
Rathi referenced the upcoming introduction of the pensions dashboard, which will for the first time allow millions of savers to see their retirement savings within one digital platform.
He says: “Experience across financial services – auto-enrolment and Open Banking – suggests that when information becomes easier to see and understand, consumer engagement often increases.
“The practical first step for dashboard users will be reaching out to pension administrators to confirm and update basic personal details. So we have to ask ourselves: with tens of millions of pots suddenly becoming visible, are administrators doing enough to prepare for a significant increase in queries, and considering the quality of the customer experience they provide?”
More than 16 million people in the UK save for their retirement into defined contribution pension schemes.
However, according to a Financial Live survey, 75% of consumer aged over 45 do not have a clear plan for how to take money from their pension or didn’t know they had to make a choice at retirement.
