The Association of Professional Pension Trustees (APPT) has told the Financial Conduct Authority (FCA) that its plans for targeted support will only deliver for savers if they are aligned with the regulator’s guided retirement framework.
The group says the two initiatives are heading in the same direction but will only succeed if they are designed to work hand in hand.
In its response to the FCA’s consultation on Supporting consumers’ pensions and investment decisions, the APPT says it backs the regulator’s overall approach. It argues that targeted support has the potential to close the advice gap, offering members help they would not otherwise pay for, in a way that is affordable and accessible.
But the APPT warns that lessons must be learned from the failure of simplified advice. The FCA and the Financial Ombudsman Service (FOS) need to set clear boundaries, allowing a “good enough rather than perfect” model that can reach more people, for targeted support to work. That means monitoring providers to stop misuse, but avoiding the kind of caveats and disclaimers that risk turning members off.
The APPT supports proposals to exclude annuities and consolidation recommendations from the regime, while still allowing providers to suggest members think about annuities in principle. It also stresses that if trustees hand over delivery of targeted support to a corporate scheme funder or another subcontractor, they must be clear with members about who is providing that help. The FCA, it says, should clarify what this means for trustees but avoid putting new restrictions on the straightforward communications they already make.
The APPT also calls for stronger coordination between the FCA and The Pensions Regulator. The group warns that without it, regulatory overlap and confusion could undermine the success of both targeted support and guided retirement.
APPT vice chair Vassos Vassou says: “We anticipate that, since to undertake Targeted Support, an entity needs to be authorised by the FCA, this will typically mean being a corporate. For Master Trusts that could be done by trustees if they form a corporate entity but, given the scale of the task, they are likely to leave this to the scheme funder. For sole employer DC trusts, only the largest are likely to look at doing this. Regulations should enable trustees to subcontract Targeted Support to another party, since not providing this would disadvantage their members against those in trusts / Master Trusts that do.”