- Advisers are mostly providing a good service to retirement income clients, although there are areas for improvement, a long-awaited FCA review has concluded (FCA asks Financial Advisers to review their processes in retirement income support – fca.org.uk)
- Key areas for improvement identified by the regulator include using personal information, including risk profiling, to set income withdrawals and advice suitability
- The FCA also found that a review of suitability was not always carried out for customers that had paid for ongoing advice
Rachel Vahey, head of public policy at AJ Bell, comments:
“This week marks the tenth anniversary since the announcement of pension freedoms. Since 2015 the advice given on retirement income options has changed considerably. Advisers have been helping their customers navigate complex decisions on how to take an income in their later years, as well as considering if they can – or want to – pass on pension wealth to their families.
“It was natural the FCA would want to dive deeper through a thematic review to explore whether the advice being given met customers’ needs. The industry has been waiting for the FCA’s review of retirement income advice for what feels like a long time.
“The FCA found a mixed bag of results. Some firms are doing well, taking account of the differing needs of their customers. But some are not. The FCA has asked firms to review their processes to make sure they are meeting all requirements.
“The biggest fault the FCA identified is on record keeping. It wants a much clearer picture of how customers’ individual needs are considered when reaching decisions on retirement income. It’s not so much that wrong decisions are made – just the evidence backing them up is missing in the files.
“This serves as a useful reminder for financial advisers for all areas of advice – it’s all about record keeping. And that inadequate records create risks for all aspects of the advice journey and achievement of good customer outcomes. The FCA wants to see evidence the right factors are being considered, and that those customers paying ongoing fees are getting a service back in return.”
