In the interim report, published in December, the FCA identified a number of concerns and proposed remedies designed to support consumer choice in this market, particularly in light of the forthcoming pension reforms. The majority of the respondents to the consultation agreed with this view of the market and the suggested remedies.
The proposed remedies are:
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requiring firms to provide an annuity quotation ranking so that consumers can easily identify if they could be getting a better deal by shopping around;
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redesigning and behaviourally trialling the information that consumers receive from their providers, such as wake up packs, in the run up to their retirement;
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in the longer term, the creation of a pensions dashboard which will allow consumers to see all their pension pots in one place.
Christopher Woolard, director of strategy and competition at the FCA said:
“The retirement income market is set for the biggest change in a generation. Over the next 12 months we want to ensure that the market is fit for purpose in the new landscape.
“We received considerable support for our proposals and we will be working with Government and the industry to implement all of our recommendations so that consumers can have confidence that they are getting the best possible outcome when making decisions on their retirement income.”
In addition, the FCA wants to see firms framing the options available to help consumers make good decisions, rather than to drive sales of certain products. The FCA will be monitoring the market to track consumer outcomes, as well as the take up of the Pension
Wise service.
Further consultation on annuity comparisons and the replacement of the wake-up packs will take place as part of the FCA’s policy work in the retirement income market in 2015. The FCA has already started to design the behavioural trials that will be carried out with consumers and are contacting firms as of today to work with us on these. The results of these trials will inform any rule changes necessary to implement our remedies effectively.
The FCA is working with Government to develop a Pensions Dashboard in the longer term. The market monitoring and framing recommendations will be ongoing pieces of work.
The report addresses the issues raised by those who responded to the consultation regarding design and implementation of each of the suggested remedies, as well as alternative remedies to those recommended by the FCA.
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