The Financial Conduct Authority (FCA) has unveiled its targeted support proposals in a bid to help support millions more people with their pensions and investments.
The FCA's proposals - Supporting consumers' pensions and investment decisions: Proposals for targeted support - will introduce a new type of help called ‘targeted support' allowing firms to make suggestions to groups of consumers with common characteristics.
It said these could include people who may be currently drawing down on their pension unsustainably, not saving enough for retirement or who have excess cash sitting in a current account.
FCA deputy chief executive Sarah Pritchard said: "We want to help consumers navigate their financial lives and plan for the long term. Some of the most difficult financial decisions we face are how to save, invest and prepare for a comfortable retirement.
"These once-in-a-generation reforms will help people navigate their financial lives and give them greater confidence to invest. This is a win-win for consumers and firms alike."
Chancellor Rachel Reeves commented: "Too many people are missing out on the support they need to build a more secure financial future for themselves and their families. Today's reforms will make a real difference to help working people make better long-term financial decisions, ultimately putting more money in their pockets as part of our Plan for Change.'
The FCA's consultation will run for eight weeks, until 29 August, with the FCA aiming to finalise its rules by the end of the year.
Targeted support and guided retirement
The FCA's consultation on targeted support noted that, in parallel with the work it has been doing with HM Treasury (HMT) in this area, the Department for Work and Pensions and HMT have also been exploring options for guided retirement for trust-based schemes to ensure default pension benefit solutions can be made available to consumers who are retiring.
It said that, following the introduction of the Pension Schemes Bill earlier this month (5 June), the FCA was also developing its policy for guided retirement in contract-based schemes – noting that, together with government and The Pensions Regulator (TPR), it aims for pension savers to be supported to make informed choices about how to access their pension in a way that works for them.
The FCA said it recognised that targeted support and guided retirement would influence how trustees choose to support their members but noted that support that relates solely to "in-scheme" occupational pension scheme investments will generally not involve trustees carrying out regulated activities without being authorised or exempt.
The FCA said it would continue to work with TPR and will consider the relevance of its joint guidance which includes setting out when trustees might be undertaking a regulated activity.
It said it would also consider if further clarity to trustees should be provided – noting it was interested to understand the situations and nature of the ready-made suggestions that trustees would want to provide if they were to give targeted support.
The FCA said it would "particularly welcome" views on how trustees may want to provide targeted support or a version of it that applies solely to ‘in scheme' benefits - including whether this would be done under the trust-based occupational pension scheme itself - or whether trust-based schemes would partner with a third-party FCA-authorised firm to deliver targeted support, or a version of it, for the scheme's members.
More broadly, it said it wanted to understand the support that trustees wish to give their members, and in particular, whether they feel unable to give such support because they are worried about undertaking a regulated activity or financial promotion.
