FCA warns over pensions drawdown risk

The FCA has warned that some consumers who choose to take pensions drawdown without advice are failing to engage with the process and are risking financial “harm.” An assessment looked into whether firms were providing necessary information to customers to make informed decisions, when accessing retirement benefits and when reviewing whether their drawdown pension continued to meet their needs. A summary of the findings highlighted areas of concern over potentially harmful disengagement with relevant information and it was found that some companies had to do more to keep customers informed. It read: “We found that some customers appear not to be fully engaging with the information and are therefore potentially putting themselves at risk of harm.“We also identified some instances where firms in the sample did not fully meet our requirements.”The FCA assessed a sample of non-advised drawdown sales by firms covering approximately 74% of the market, by sales volume, for the period from April 2015 to April 2017. It looked at all forms of communication with customers, including written, telephone and online. There were some more encouraging findings in the assessment with firms found to be “broadly meeting their obligations to communicate clearly with customers.” The report added: “Written, oral and online information is generally in line with our requirements and provides customers with the necessary information to make informed decisions about their retirement options.“Sales processes are continuing to evolve with firms allowing online transactions and providing online tools and calculators to help customers make informed decisions.”The FCA provided feedback to all firms that participated in the review and agreed actions with some firms, warning that it will “follow up to ensure that these are implemented.”

FCA warns over pensions drawdown risk

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