FCA tells firms to ensure value in non-workplace pensions
Image: FCA
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The Financial Conduct Authority has warned providers of unit-linked non-workplace pensions they need to be actively identifying areas of poor value in legacy books and acting where necessary to ensure compliance with the Consumer Duty.
Unit-linked non-workplace pension and savings policies account for around 17m policies and £500bn of assets.
However, a multi-firm review by the watchdog has found that people holding legacy pension products which are closed to new savers could be receiving poorer value than if they were in newer products, citing complex charging structures, older product design and weaknesses in firms' data. Around half of the policies in the FCA's sample were in closed products.
The FCA has now told providers to make sure consumers get fair value and that products support good outcomes, as stipulated by the Consumer Duty.
"Consumers in older products should not be left behind, and the good news is that some firms are already showing it doesn't have to be this way. We want to see that progress reflected right across the market,” said Charlotte Clark, director of cross-cutting policy and strategy at the FCA.
The regulator found that some providers are making efforts to simplify or rationalise their legacy unit-linked products and funds or at least intend to do so.
“There was evidence of firms capping or reducing charges for customers in legacy products. Some were also comparing outcomes across different customer groups and products, and moving customers to better-value alternatives,” the regulator noted.
As well as telling them to follow these examples, the FCA is engaging with firms on barriers they face in improving value for customers, particularly in closed books.
