In its response to the FCA’s Consultation Paper CP24/27 Advice Guidance Boundary Review – proposed targeted support reforms for Pensions, (which closes 13 February), Aegon has highlighted the many benefits targeted support could deliver for non-advised consumers and is encouraging the regulator to keep new regulations flexible to deliver on its full potential.
Huge opportunity
Steven Cameron, Pensions Director at Aegon said: “After years of an ever-growing advice gap, it’s vital that the FCA’s proposals around targeted support achieve their full potential. While targeted support will never replace the value of full financial advice with personal recommendations, there are millions of non-advised individuals who could benefit from a suggested way forward, appropriate for people who share common characteristics with them. Many who would benefit from this service may go on in future to seek full financial advice. With the Government’s review of pension adequacy on hold, targeted support could offer pointers to millions of auto-enrolees who have no real insight into how much they should be saving for the retirement lifestyle they aspire to.
“With pension freedoms approaching their 10th anniversary, those approaching retirement without advice – including many auto-enrolees – could receive some much-needed help navigating their retirement options. And with pension dashboards on the horizon and a Government focussed on scheme consolidation, it’s also vital those without advice can make sensible decisions around pension consolidation.”
A flexible approach to regulation
“With targeted support almost within our grasp, we’re keen the FCA retains as much flexibility in regulations as possible. This will allow the industry to innovate and to meet changing consumer support needs. We’re continuing to call on the FCA to allow adviser firms and not just pension and investment providers to apply for the necessary regulatory permissions, with fast-track approval for existing regulated firms. Within an outcomes-based approach, we’d welcome the FCA offering examples to illustrate the potential scope. This could set out possible scenarios, customer segments and ready-made solutions to encourage the industry to come up with innovative services.”
The barriers to success
“However, it will be essential that the Financial Ombudsman Service (FOS) offers concrete assurances over how it will differentiate between its expectations for full advice and for the less personalised suggestions from targeted support. The FCA has recognised that currently, the Privacy and Electronic Communications Regulations (PECR) rules may act as a barrier to firms being able to proactively offer targeted support. We believe there is justification for exempting firms with certain FCA regulated permissions from the scope of PECR.”
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