The Financial Conduct Authority (FCA) and The Pensions Regulator (TPR) have launched a joint regulatory strategy to tackle the lack of informed choice and customers’ retirement needs, to make sure they are getting “good value for their money”.
The strategy focuses on consumer support, providing advice and regulatory interventions to help consumers maximise their pension savings and help them understand the best services to access based on their needs (eg length of time for retirement income, long-term goals etc).
The initiative comes after the two regulators found an average of £91,000 ($119,583, €109,617) was lost through pension scams in 2017, and that only 25% of the population feels confident enough to choose a pension product.
Industry backing
The strategy has been welcomed by pension experts, showing confidence in the FCA and TPR’s actions.
Steven Cameron, pensions director at Aegon, said: “It’s very welcome to see a joint regulatory strategy which we hope will lead to a long-term consistent approach across contract and trust-based pensions. This will benefit members who often have both types of pension as well as ensuring efficiencies for schemes and providers through consistent regulation.
“The goal must now be to step back and examine how best to join up the journey, with timely advice and guidance, to achieve a real breakthrough in consumer engagement, understanding and informed decision making.”
Similarly, Steve Webb, director of policy at Royal London, said that it is always a good sign when regulators work together, especially when aiming to look at the bigger picture to produce better outcomes in the long-term.
Growing sense of fatigue
However, while the two regulators have identified the risks that consumers face when dealing with pension savings, direct action is still left to the government.
Ian Browne, pensions expert at Quilter said: “For a number of years there has been an onslaught of pensions regulation and legislation and there is a growing sense of fatigue over continually tinkering from all sides. The overall theme of The Pensions Regulator and the FCA joining forces for a more coordinated and holistic approach to pension regulation can only be a good thing.
“There has been a desire for a long time for pension policy to be handled independently of government in a similar way to how the Bank of England sets interest rates. If TPR and the FCA are able to agree a joint strategy, this is a stepping stone in the right direction to that end. The next step is for [Department for Work and Pensions] and [HM Treasury] to have a joint pension strategy and for all pension legislative changes (including tax changes) to be set via joint consultation.”
