FCA may introduce tougher scrutiny of retirement income sector

The FCA is mulling proposals to introduce two new regulatory returns to collect more data about the retirement income market from providers of retirement income products. If it goes ahead, the proposals would be incorporated into Chapter 16 of the Supervision manual (SUP 16). The aim would be to improve protection for consumers as retirement income decisions become more important post the pension freedoms and “promote” effective competition between providers.The watchdog wants to monitor the retirement income sector more closely following the pension freedoms and target, it says, “regulatory interventions” where necessary by monitoring consumer risk more closely. It also plans to assess competition between providers more closely.The changes are proposed in CP16/36 and could lead to significantly more data being collected by the regulator to scrutinise the retirement income market much more comprehensively. The FCA would create two new regulatory return requirements to replace the current ad hoc sample system. Following the consultation, which ends in February, the regulator will publish a Policy Statement in Spring 2017 which would lead to change on reporting requirements.The FCA says that since the introduction of the pension freedoms in April 2015 it has been collecting retirement income data from a representative sample of pension providers, originally on a quarterly basis. During this ad hoc collection it has refined both the data collected and the supporting guidance for firms, it says.It has also published market level data through its Data Bulletin. Building on experience from the ad hoc data collection, it now proposes to create two new returns to collect retirement income data and replace the current ad hoc return.The regulator says: “Our proposals are designed to advance our operational objectives, in particular securing an appropriate degree of protection for consumers and promoting effective competition in the interest of consumers, by collecting data that allow us to:• monitor market trends and track consumer behaviour• provide supervision with information about individual firms, including their market share of pensions and retirement income back book, how many retirement products firms are selling, to what types of consumer and through what channels• target our regulatory interventions by identifying and monitoring risks to consumers in the retirement income market• identify what products are growing quickly and may require greater attention• track indicators, such as switching by consumers, to understand how competition is working in the market• inform our business plan priorities around pensionsThe consultation is relevant to providers of pensions, annuities and income drawdown, and stakeholders with an interest in pensions and retirement issues. Comments on the consultation are required by 24 February 2017 and can be emailed to email This email address is being protected from spambots. You need JavaScript enabled to view it. or sent in writing to Nicholas Twynham, Strategy and Competition Division, Financial Conduct Authority, 25 The North Colonnade, London E14 5HS. There is also a consultation form which can be used. Contact the regulator for details.

FCA may introduce tougher scrutiny of retirement income sector

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