The regulator's perspective

Following the introduction of the pension freedoms in 2015, the FCA launched the Retirement Outcomes Review to assess how the market has evolved and to address any areas of concern.

The primary focus of the FCA was on consumers who do not take regulated advice. In June 2018 the FCA published its final report which identified areas of concern. The final report set out the FCA findings and the proposed remedies, which were consulted on in two tranches.

The result of the subsequent two consultations was Policy Statement 19/1 which implemented the first package of remedies, this included:

  • Revised rules in respect of the information which is sent to consumers before they decide how to access their pension savings, including ‘wake-up’ packs, ‘wake-up’ pack reminders, and additional retirement risk warnings.
  • Enhancements to the information provided to consumers about annuities and eligibility for enhanced annuities.
  • Changes to make the cost of drawdown products clearer and more comparable.

Changes to making the cost of drawdown products clearer came into force in April 2020.

Policy Statement 19/5 then set out the second package of remedies from the Retirement Outcome Review which included:

  • Introducing ‘investment pathways’ for consumers entering drawdown without taking advice.
  • Ensuring that consumers entering drawdown only invest mainly in cash if they take an active decision to do so.
  • Requiring firms to send annual information on all the costs and charges paid over the previous year to consumers who have accessed their pension.

The final rules and guidance set out in PS19/5 came into effect on 1 August 2020.