The FCA has issued Consultation Paper ‘CP 15/30: Pension reforms – proposed changes to our rules and guidance’.
The FCA states:
‘In this paper we set out our expectations as to how our existing rules and guidance operate in the new pensions environment, consult on a number of changes aimed at ensuring our rules are fit for purpose and invite discussion on areas where we are minded to carry out further work.’
This is essential reading therefore if you operate in this arena. Not only is it relevant to those firms providing pension accumulation and decumulation services it is also relevant to those firms carrying out debt collection or providing debt advice.
Much of the content draws on the FCA’s recent documents and other changes to pension legislation. The paper also, usefully, clarifies and summarises other requirements such as risk warnings and cancellation requirements.
The areas for consultation includes but is not limited to:
- Promoting competition – primarily ensuring that consumers receive clear, timely, relevant and adequate communications;
- Encouraging customers to explore the full range of options for accessing pensions;
- Encouraging customers to shop around – not just for Open Market Options but for all retirement options;
- Preventing application forms being sent with ‘wake-up packs’ (wake-up packs are the information sent 4–6 months before retirement);
- Restricting when firms can send illustrations to customers;
- Requiring firms to make customers aware of key information in communications;
- The FCA’s monitoring of the evolving environment;
- What cannot be included in the definition of High Net Worth Income and certification statements;
- Adding guidance to the rules on debt collection in relation to pension savings;
- Updating rules regarding pension attachment orders; and
- Clarifying the methodology for standardising projection illustrations.
There are other areas for consultation that are more relevant to providers but firms should be aware of the proposals.
The areas for discussion are:
- Non-advised annuity purchase;
- Lifestyling investment strategies;
- Transfer value analysis;
- Product disclosure;
- FSCS protection of pensions.
Also included in ‘Annex 2: Retirement outcomes review – update’ is a retrospective review of recent changes introduced by the FCA, upon which they are seeking your comments.
The FCA is looking for responses to the consultation questions by 04 January 2016 and the ‘retirement outcomes review – update’ (annex 2) by 30 October 2015.
Following the consultation process the final rules and guidance will come into effect either immediately, after six months or after one year.
The Consultation Paper can be accessed here.