Aegon’s Steven Cameron sets out his ‘pick’ of FCA plans which may affect adviser firms in 2020
As with Government and industry, the FCA will be devoting a considerable amount of time and resource to Brexit. It will be updating its own regulations and rulebooks and checking the industry is making all the necessary preparations and taking all the required actions. But again, like Government and industry, it has an agenda that goes far beyond Brexit.
Advice to Defined Benefit members
In Q1 we’ll get the next (and for now hopefully final) set of regulations relating to advice on defined benefit transfers. The big concern is, no matter how well intentioned the latest interventions are, there’s a risk of dramatically reducing the supply of advice in this key area.
We’ll soon know if the FCA is proceeding with its proposed ban on contingent charging and how the carve outs for certain vulnerable individuals will work. Importantly, I hope to see some development of the ‘abridged advice’ proposals, ideally making this approach more cost effective and safe for advisers to use to weed out those who should not be considering transferring. We’ll also see how strongly the FCA will expect advisers to favour workplace pensions over individual pensions as the receiving vehicle. This will all come alongside further suitability assessment work.
RDR and FAMR
In early 2020, we’re also expecting the delayed feedback on the vitally important review of the effectiveness of the Retail Distribution Review and the Financial Advice Market Review. Together, the RDR and FAMR helped create an adviser industry which is at its strongest and most professional, but there’s always scope to improve regulation. FAMR looked not just at how to make advice more available, but also at the role of guidance, where a clearer definition could open up new opportunities for adviser firms to extend their services.
Investment Platform Market Study
The FCA has also promised a consultation on platform exit fees in Q1. While most platforms don’t have these, any which remain are seen as a barrier to transferring between platforms. One challenge will be how to define what is a platform rather than a product exit fee.
Non-workplace pensions
We also expect a further consultation on aspects of non-workplace pensions arising from the FCA’s earlier analysis. This is likely to focus on disclosure and charges but could also take forward the concept of investment pathways for non-advised customers accumulating in non-workplace pensions.
Open Finance
The FCA’s Open Finance Call for Input is currently open, closing in March. Allowing customers to grant their adviser access to their pension and investment data could have far reaching implications for advisers and could once more open up questions on the definition of advice and guidance. Expect much more to come in this developing area.
Independent Governance Committees
Having just confirmed it is extending the remit of Independent Governance Committees, including assessing value for money of investment pathways for non-advised drawdown customers, the FCA is due to publish a paper on broader IGC effectiveness in early 2020. I’d expect positive findings.
Working with the Pensions Regulator
The FCA is also working more closely with the Pensions Regulator. We can expect to see more on its analysis of the complete pension journey and proposals on a consistent framework across contract and trust based schemes for assessing value for money. One of the successes of IGCs has been their ability to tailor value for money assessments to their provider’s client base. So I hope we don’t see too much prescription here.
