Following the publication of CP21/32 (see our earlier blog), on 1 December the FCA published its final rules (PS22/15) requiring non-workplace pension ("NWP") providers to offer consumers a default investment option, to support those struggling to make a choice. 

In CP21/32 the FCA proposed to require firms to:

• offer non‑advised consumers buying an NWP a ready‑made, standardised investment solution (a ‘default option’), and make this available alongside other investments;
• send a notification (‘cash warning’) to consumers with significant and sustained levels of cash in their NWP to warn them that their pension savings are at risk of being eroded by inflation.

Following consultation feedback, the FCA has finalised the rules and guidance largely as consulted on, with the following changes and clarifications: 

• providing clarity on the scope of the exemption for firms with legacy‑only business;
• clarifying what the FCA considers to be a ‘bespoke SIPP’;
• amending requirements on the naming of the default option to allow firms flexibility in its naming;
• adding a definition of ‘distributes’ for investments;
• adding guidance to clarify that where a firm outsources the manufacturing of a default option, the firm remains responsible for complying with the requirements in the new default fund conduct of business rules;
• other miscellaneous clarifications and amendments aimed at improving clarity.