Work and Pensions Committee announces charging for pension transfer advice inquiry
Following evidence of poor advice given to members of the defined benefit (DB) British Steel Pension Scheme (BSPS), submitted to the government's Work and Pensions Committee’s inquiry into pension freedoms, the Committee is now inviting evidence from interested parties relating to contingent charging.
The Committee previously recommended that this charging structure should be banned specifically for DB pension transfer advice, judging that the set of circumstances leading to poor outcomes were not unique to BSPS members. The UK Financial Conduct Authority (FCA) concluded there was a lack of evidence linking contingent charging to unsuitable advice and bad outcomes (this can be viewed at bit.ly/2y03uKB).
This consultation is an attempt by the Committee to support the FCA in clarifying which safeguards would avoid causing unintended harm, particularly to vulnerable customers. The PFS will make a representation to the Committee, offering assistance to support the gathering of evidence for the inquiry, the terms of which can be viewed at: bit.ly/2Fhf2ib
Single Financial Guidance Body goes live
The UK government’s Single Financial Guidance Body (SFGB) went live on 1 January 2019, aiming to consolidate government-sponsored financial guidance.
The SFGB creates one organisation from three existing advice providers – the Money Advice Service, The Pensions Advisory Service and Pension Wise. In 2019, a new name will be sought for the SFGB. Currently funded by levies on the financial services industry and pension schemes, sponsored by the Department for Work and Pensions and also engaging with HM Treasury, the newly formed body has five core functions: pensions guidance; money guidance; debt advice; customer protection; and strategy, which involves working with the financial services industry to improve people’s financial capability and education. For more information, visit: singlefinancialguidancebody.org.uk
FCA proposes rules to improve retirement outcomes for consumers
Following previously expressed concern about consumers moving into drawdown and holding their funds in investments that will not meet their needs, the UK FCA has announced it is consulting on measures involving firms offering ready-made investment solutions to customers who do not take advice that broadly meet their objectives, otherwise known as ‘investment pathways’.
The measures are designed to prevent up to 100,000 consumers a year losing out on pension income when they access their pension freedoms.
The FCA also announced new rules on the ‘wake-up packs’ that must be given to consumers as they approach retirement – relating to the frequency of its delivery and preventing marketing material from being included – and on the disclosure of charges by pension providers.
The FCA is inviting feedback from stakeholders on measures in the consultation paper by 5 April 2019, before finalising the rules.
The investment pathways consultation can be accessed at: bit.ly/2G5a0Vf
FCA publishes annual ‘Sector Views’
The FCA has published its annual document which provides an overall view of how the regulated financial services market is performing based on an analysis of the themes used to identify where harm, and drivers of harm, are occurring across firms.
The market is grouped under seven sectors (retail banking; retail lending; GI and protection; pensions and retirement income; retail investments; investment management and wholesale financial markets).
The FCA has also shared its view on the drivers of changes that are taking place within sectors - particularly the potential impact of Brexit, Fintech, climate change and the financial needs of different generations.
The full report can be accessed at: bit.ly/2CUzWQd
City minister urges savers to seek independent advice as pensions cold-calling is banned
As of 9 January, companies that make unwanted, unsolicited phonecalls to people about their pensions may face enforcement action, including fines of up to £500,000.
The ban prohibits cold-calling in relation to pensions, except where:
- The caller is authorised by the FCA, or is the trustee or manager of an occupational or personal pension scheme
- The recipient of the call consents to calls, or has an existing relationship with the caller. Economic Secretary to the Treasury (City minister) John Glen advised: “If you receive an unwanted call from an unknown caller about your pension, get as much information you can and report it to the Information Commissioner’s Office. I’d also urge all savers to seek independent advice if you’re thinking about making an important financial decision.”
Evidence of cold calling can be reported to the Information Commissioner’s Office via: bit.ly/2VE44YF