The FCA has published the third in its series of Regulatory Priorities letters, this time for the pensions sector. The letter recognises that consumer needs must stay central while the current batch of reforms allow firms to grow and innovate. The FCA wants also to ensure that consumers get consistent outcomes regardless of which regulator is responsible for any particular matter. The FCA is primarily concerned with the contract-based DC market. Its priorities for the next year are:
- ensuring well-run schemes that provide value for money. It wants firms to engage in the development of changes driven by the proposed workplace savings VFM framework and the wider Pension Schemes Bill. We should see the final rules for the VFM framework by the end of the year;
- encouraging effective support for consumers, who generally still do not engage as much as they should. The FCA will be supporting firms who want to provide targeted support, and want other firms to assess how they can better support non-advised customers. The FCA plans a consultation in the first half of the year on simplifying its advice rules;
- supporting growth and innovation. It wants firms to review their approach to asset allocation and to consider whether their control framework may need to evolve if the firm is investing in a broader range of asset classes or paying performance fees; and
- modernising pensions and long term savings – the FCA will be considering how it can modernise its own regulatory framework as well as supporting firms to innovate and address issues such as difficulties in contacting customers and pension savings that are locked in older products.
It has been working to address the advice gap and to support customers using digital planning tools and making non-advised decisions.