FCA: pension providers must give risk warnings

Under the new rules, firms will be required to ask consumers about key aspects of the circumstances that relate to the decision they are making about their pension pot, including issues such as health and lifestyle choices or marital status. This will come into force from April.

Providers will be required to give relevant risk warnings, such as warning of the tax implications of their decisions, in response to answers from consumers. Firms must also further highlight the availability the government’s new Pension Wise scheme or regulated advice.

Christopher Woolard, director of strategy and competition at the FCA said:

“The decisions consumers make about what to do with their pension pot are important and in some instances these choices are irreversible. We want to make sure that people have the help they need to make those choices.”

Andrew Megson, Managing Director of Retirement, said:

“While the new pension’s regime will introduce the Pensions Wise Service and more opportunities for consumers to personalise their retirement finances, it also has the potential to confuse people with a multitude of options.  The ‘second line of defence’ is vital as it means that at the very least people are asked about their health, marital status and lifestyle choices – all factors which can have a significant impact on retirement choices.

“We have been a strong advocate of the open market option and the ‘second line of defence’ should act as a prompt to ensure that people do shop around more.  Independent financial advisers have a significant role to play in helping people to make smart choices around retirement and today’s announcement clearly highlights the fact that the FCA sees them as a valuable part of the process.”