The FCA has announced that it will shortly be undertaking a thematic review to assess the advice consumers are receiving on meeting their income needs in retirement.

Why?

Previously planned work on this topic (known as ‘Assessing Suitability Review 2’) was paused as a reaction to Covid but the Regulator believes that it is now appropriate to examine how the retirement income advice market is functioning, especially in light of the current cost of living difficulties being experienced by many. Accordingly, the review will also focus on how firms are responding to changing consumer needs as a result of the rising cost of living.

The review will also link in to the lifetime mortgages work the FCA committed to in the 2022/23 Business Plan in order to gain a clearer understanding of outcomes for consumers in later life.

Since 2015, there has been a significant shift to consumers drawing an income from pension funds which remain invested. Given the wider range of retirement options available, it is clearly important that clients get good advice at the point they first access their pension savings and, where relevant, on an ongoing basis.

The findings from the review will be used to assess whether any new strategy or rules are required.

And Consumer Duty seems to be never far away from a mention recently. Needless to say, the FCA also considers that the findings will be an important indicator of how firms are implementing the Consumer Duty.

Next steps

The review will commence in Q1 2023. Firms selected for the review can expect to be contacted early in 2023.

The report back with findings should be published in Q4 2023.