The Financial Conduct Authority (FCA) has today announced its final rules on capping early exit charges for consumers eligible to access the government’s pension reforms from age 55.
From 31 March 2017, early exit charges will be capped at 1% of the value of existing contract-based personal pensions, including workplace personal pensions. Early exit charges that are currently set at less than 1% may not be increased. Firms will not be able to apply an early exit charge to personal pension contracts entered into after these rules take effect.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA said:
“People eligible for the Government’s pension reforms should feel able to access them as they wish. The 1% cap on early exit charges for existing pensions, and the 0% cap for new contracts, will mean that current and future savers will not be deterred by these charges from accessing their pension pots.”
Notes to editors
- Policy statement - PS16/24: Capping early exit pension charges: Feedback on CP16/15
- The FCA was given both the power and duty to cap early exit charges by Parliament through recent amendments to the Financial Services and Markets Act (2000). The purpose is to ensure that these charges do not deter consumers from accessing the pension reforms introduced by the government.
- The Department for Work and Pensions conducted a separate consultation on 'Capping early exit charges for members of occupational pension schemes' and is expected to publish its response today.
- On 1 April 2013, the 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.