Synopsis: The FCA has written to pension providers to explain what support they will be expected to provide for customers when they take their pension benefits under the new tax regime.
The FCA has written to pension providers to explain what support they will be expected to provide for customers when they take their pension benefits under the new tax regime.
After a period of consultation last year the FCA published a Policy Statement (14/17) which set out the standards for guidance providers as well as a set of rules for firms that were specific to the pension changes.
However, firms have reported that they are unclear as to how far they should go to help people who choose not to use Pension Wise (the new guidance service).
Accordingly, the FCA will be taking further steps to clarify what firms will be expected to do. By April 2015, the rules will provide additional consumer protection to be known as ‘additional protection’.
When a consumer contacts a provider to access their pension, the provider will be required to ask the consumer about key aspects of their circumstances. Providers must give relevant risk warnings in response to the customers’ answers. They must explain that Pension Wise or regulated advice is a key protection in making an important and irreversible decision.
The messages must be in direct and simple language and there will be a requirement to remind customers of Pension Wise and how to access it. Customers must also be told of the tax implications of taking cash from their pension.
In recognising that time is the essence, the rules will be introduced on a temporary basis on 6 April, prior to consultation. The FCA believes that it should be possible for firms to provide the proposed risk warnings without the need for regulated advice. The full requirements will be made clear in published rules.
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