FCA Policy Statement PS19/21 – Retirement Outcomes Review

The 2015 pension freedoms give consumers more complicated choices to make about how to invest their pension savings, and when to draw on them. In 2016, The FCA launched the Retirement Outcomes Review to investigate how consumers and providers were responding to the pension freedoms.

Final rules and guidance on the first stage were published in January 2019 that covered ‘wake-up’ packs, information for consumers about annuities, and changes to make the cost of drawdown products clearer and more comparable for consumers.

Policy Statement PS19/21, published in July 2019 sets out a second phase of  final rules and guidance. These rules will come into effect on 1 August 2020.

The new requirements are intended primarily to help non-advised drawdown consumers who struggle to make investment decisions. A secondary objective is to promote competition by making the actual charges paid by consumers clearer, and comparisons easier.

The new rules and guidance:

  • introduce ‘investment pathways’ for consumers entering drawdown without taking advice
  • ensure that consumers entering drawdown only invest mainly in cash if they take an active decision to do so
  • require firms to send annual information on all the costs and charges paid over the previous year to consumers who have accessed their pension

Important Note: ATEB news is intended to provide general information ONLY. The content, including any views expressed or guidance provided, does not replace the need to comply fully with FCA Rules and Guidance. Unless you have discussed news article content with ATEB, and specifically how it relates to your circumstances, then ATEB disclaims all liability and responsibility and actions arising from any reliance placed upon it. For the avoidance of doubt therefore, any reliance you place on such information without our consultation is at your own risk.

ATEB Compliance offers compliance and regulatory advice.

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Our View

The rules and guidance in PS19/21 are mostly relevant to Pension Providers rather than advisers.

However, the FCA reminds adviser firms of the obligation they will have, under existing rules, to consider available pathway solutions when they assess suitability for clients who are deciding how to invest drawdown funds.

Action Required By You

  • Remember that all potential solutions and investment options must be considered.
  • Contact your usual Consultant or contact ATEB direct if you wish to discuss this or any other regulatory aspect.
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About the Author

Technical Manager - Often referred to as the Oracle or the Sage, Alistair has a wealth of financial services experience. He is our go-to Technical Manager and enjoys nothing more than a complicated conundrum. Feel free to test his renowned knowledge by getting in touch.

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