Three steps to the Consumer Duty starting line
Earlier this month, the FCA released a Portfolio
The latest Portfolio Strategy communication confirmed the FCA’s drive regarding advice to British Steel Pension Scheme members, whilst also confirming a two-year focus on Retirement Income advice.
As a higher risk area, it’s no surprise that the FCA are focussing on Retirement Income advice. Consider ten years ago: the majority of clients would have to buy an annuity or take a scheme income from an occupational pension scheme.
However, the changes to the rules – including pension freedoms in 2015 – have led to far more clients choosing drawdown from their retirement income. This has created a significant shift from secured income throughout retirement to income dependent on investment performance.
In addition, the FCA had previously announced their intent to focus on Retirement Income advice in its second Suitability of Advice review, but this was cancelled in the early months of the pandemic. However, the Portfolio Strategy letter confirms that the FCA’s focus hasn’t changed, and they will concentrate on this area of advice over the next two years.
They also confirmed that details of their planned work will be announced in the coming weeks.
So, what can your firm do to demonstrate it’s providing suitable advice to clients for Retirement Income?
Reviewing your firm’s Retirement Income advice processes and advice files will help ensure you’re in a good position for the work the FCA will be announcing soon. The results of any process or advice file reviews are useful MI and should reassure your firm’s governing body that clients are receiving good outcomes.
In turn, this MI will also be a helpful point of reference as you get ready to implement the Consumer Duty.
TCC’s regulatory experts are skilled at delivering a personalised service to help firms meet their compliance needs. To learn more about how our specialists can help your firm, get in touch today.