On 19th January, the FCA announced it is undertaking a thematic review assessing the advice consumers are receiving on meeting their income needs in retirement.
What has prompted this work
Pension freedoms changed the way consumers access their retirement savings. Given the wider range of retirement options available, the FCA see it as vital that consumers get good advice at the point they first access their pension savings and, where relevant, on an ongoing basis.
Since 2015, there has been a significant shift to consumers drawing an income from pension funds which remain invested. Advice in this area can be complex, so it is important firms understand the needs of their consumers and ensure their advisory solutions deliver consistently suitable advice.
The FCA's previously planned work on this topic (known as ‘Assessing Suitability Review 2’) was paused to allow resource to be concentrated on its response to Covid. This new thematic review will examine how the retirement income advice market is functioning. The FCA will also focus on how firms are responding to changing consumer needs as a result of the rising cost of living.
The findings will help inform the FCA's future strategy for the sector. The results will also be an important indicator of how firms are implementing the Consumer Duty.
The review will begin in Q1 2023 and the FCA aim to publish a report setting out its findings in Q4 2023.
Firms selected for the review can expect to be contacted early in 2023.
"This review is a piece of discovery work to explore how financial adviser firms are delivering retirement income advice and assess the quality of outcomes consumers are getting."