Stephen Lowe: FCA s stronger nudge wrong solution at wrong time
Cry for help
Stephen Lowe: If the feeble ‘stronger nudge is the best a constrained FCA is allowed to come up with then it s time the government started to loosen the shackles.
Stephen Lowe
Stephen Lowe looks at the latest attempt to boost Pension Wise guidance take-up and is not impressed with the FCA s stronger nudge policy, which he says is doomed to fail.
Three years on from the Financial Guidance & Claims Act we finally have sight of how the Financial Conduct Authority (FCA) plans to meet its obligation to increase the numbers taking up their entitlement.
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Private Investor is a recipient of the information who meets all of the conditions set out below, the recipient: 1. Obtains access to the information in a personal capacity; 2. Is not required to be regulated or supervised by a body concerned with the regulation or supervision of investment or financial services; 3. Is not currently registered or qualified as a professional securities trader or investment adviser with any national or state exchange, regulatory authority, professional association or recognised professional body; 4. Does not currently act in any capacity as an investment adviser, whether or not they have at some time been qualified to do so;
So far, DC plans have largely been focused on the onset of auto-enrolment and changes to the regulatory framework - be it the ‘charge cap, ‘pension freedoms or consultations around ‘value for money , says Annabel Tonry, Executive Director at J.P. Morgan Asset Management (JPMAM).Download
In 2015 George Osborne, then the UK Chancellor of the Exchequer, decided that those age over 55 could take much more of their pension in cash. This has since opened up a range of possibilities for DC scheme members in the world of pensions.Download
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FCA requires providers to book Pension Wise appointments in guidance push
‘Stronger nudge’
Sheldon Mills: We know that when people use Pension Wise they are happy with the service and find it helpful. However, few people are choosing to attend a guidance appointment.
Pension providers will be required to book Pension Wise appointments for customers under new plans published by the regulator as it attempts to increase retirement guidance take-up.
Providers currently have a duty to signpost clients to Pension Wise for guidance on their retirement plans but will now be required to book the appointment for customers under a stronger nudge policy.
FCA wants providers to do more than just signpost Pension Wise guidance
Requiring pension providers to give consumers a stronger push towards guidance is a “plan set up to fail”, according to Stephen Lowe, group communications director at retirement specialist Just Group.
His comment follows an FCA proposal to make firms “nudge” consumers towards Pension Wise, a free and impartial government service that helps people understand the options for their pension pots.
What are the changes?
Currently, pension providers are required to signpost consumers to the service and encourage them to seek appropriate guidance or advice.
But take up remains low.