The Financial Conduct Authority (FCA) has today written to the
Chief Executives of financial advice firms asking them to review
their processes when providing retirement income advice.
The letter comes following the FCA’s thematic review of
retirement income advice which examined how firms were providing
advice.
The review identified examples of good practice in the market
with some firms showing they had considered their customers’
needs and designed their advice model in a way likely to lead to
good outcomes. Some firms had clearly detailed processes,
specific training on decumulation and used a range of tools to
help illustrate complex information for customers.
However, the FCA also found some examples where firms were not
taking account of the needs of their customers. This included
where firms operated in a way unlikely to lead to good customer
outcomes by not considering a sustainable level of income to
support retirement and some instances of firms not providing the
right information to customers.
Most of the advice files the FCA reviewed showed advice provided
was suitable. However, in a small number of instances
recommendations resulted in consumers losing guarantees or
incurring unnecessary charges.
Sarah Pritchard, Executive Director of Markets and International,
at the FCA said:
“Financial advisers have a vital role in helping consumers to
make the right decisions now to support them long into the
future. Decisions for consumers approaching retirement are
complex, with the potential for risk. We want to support a sector
that can help consumers access pension benefits, invest with
confidence and have a sustainable income when they retire.
“Some firms are getting this right and making a real difference
to their customers. However, others are not even getting the
basics right and putting their customers’ futures at risk. We
urge all firms to take on board our findings and review their own
processes. Where they do not, we will act.”
To help firms the FCA has published a Retirement Income Advice
Assessment Tool (RIAAT) and accompanying instructions. This tool
shows how we assessed advice files and shows how firms can assess
if their advice is compliant with our rules, including the
Consumer Duty.
The FCA has also published the Cash Flow Modelling article which
will help firms when undertaking modelling.
Notes to editors
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Thematic Review of Retirement
Income Advice
-
Dear CEO letter
-
Retirement Income Advice
Assessment Tool (RIAAT)
-
Cash flow modelling
article
