The Financial Conduct Authority (FCA) has published standards[1]1 for the bodies responsible for delivering the Government’s new Guidance Guarantee aimed at those with defined contribution (DC) pensions. The FCA has also published rules requiring pension provider firms to direct their customers to the guidance service at retirement.
In March 2014, the Chancellor announced changes to the choices that people in DC schemes will have at retirement. To support this people will be entitled to free, impartial, guidance on the choices they face when deciding how to use their retirement savings.
The FCA has strengthened the standards, on which we consulted earlier in the year, to ensure that they fully meet the aims and objectives of the policy - ensuring consumer confidence and the delivery of helpful guidance for consumers.
Christopher Woolard, director of policy, risk and research at the FCA said:
'Any decision about your pension has far-reaching consequences that often cannot be reversed. The pensions’ landscape will fundamentally change from April 2015 so it is important that people get support to enable them to make the right choices about what to do with their retirement fund.
'We want this to work well for consumers and industry and I believe that the standards and rules we have published today strike that balance. They will give consumers confidence in the quality of the service they will receive and provide certainty to those tasked with delivering it from April next year.'
The FCA has outlined changes to the standards including: how complaints should be dealt with; how the outcome of the guidance guarantee session should be recorded; and how those delivering the guidance should work together to ensure that all those accessing the service get a consistent outcome.
The FCA has outlined some detail on plans for monitoring and enforcing the standards, with further guidance to be issued early next year. There will also be a thorough review of the rules in the pension and retirement area in 2015. This will ensure that consumers have the adequate level of protection following the range of reforms being introduced in the market.
The FCA has also published its annual fees consultation paper[2] today. The paper outlines how the FCA plans to levy fees for the Guidance Guarantee. Following initial consultation, the paper includes a proposal that financial advisers will receive a 50% reduction on the new levy.
The consultation paper also seeks views on the fees for the FCA’s consumer credit regime, the charges for bringing second charge mortgage lenders under the FCA’s mortgage lending regime and for the new Payment Services Regulator.
Notes to editors
- This Policy Statement and the near final instruments in it have been prepared on the basis that the Pension Schemes Bill will be passed by Parliament and given Royal Assent in its current form. We propose to make these instruments as soon as possible after the Bill receives Royal Assent. The bill in its current form[3].
- PS14/17: Retirement Reforms and the Guidance Guarantee, including feedback on CP14/11[1].
- CP14/26 Regulatory fees and levies: policy proposals for 2015/16[2].
- On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.