The Financial Conduct Authority (FCA) has today written to the Chief Executive Officers (CEOs) of pension providers to outline plans to introduce additional protection for those accessing their defined contribution (DC) pension pot from April.
Under the new additional protection 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. These include 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 of 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."
Firms will be required to deliver these messages in a direct and simple language which will be set out when the new rules are published.
Notes to editors
- The rules will be introduced on a temporary basis from 6 April without consultation to provide additional protection for consumers.
- Once additional the additional questions have been asked individuals will still be able to proceed on an execution only basis.
- On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA.