The Financial Conduct Authority (FCA) has published the Terms of Reference for their Retirement Outcomes Review. The aim of the review will be to assess the impact of the pension reforms on competition in the retirement income market by looking at how firms and consumers have responded to the new freedoms.
The FCA announced their intention to undertake this review in their 2015/16 Business Plan, as part of their package of work in the pensions and retirement income sector - a priority area for the FCA.
In their Retirement Income Market Study in March 2015 they identified a number of issues relating to consumer decision-making following the introduction of the pension reforms in April 2015.
The FCA were concerned that increased flexibility, product complexity and opaque charges could make it harder for consumers to compare products and shop around, weakening competitive pressure on firms. We also made it clear that we expected firms seeking to meet mass market consumer demands to ensure that they develop appropriate distribution and guidance arrangements.
The FCA are keen to understand whether the issues they have identified have become more or less acute.
The review will explore whether competition is working effectively in the retirement income market following the introduction of the pension reforms, focusing on four key areas:
Shopping around and switching Non-advised customer journeys Firm business models and barriers to entryThe impact of regulation on retirement outcomesThe terms of Reference can be found here
In the Terms of Reference document, the FCA have set out some specific questions relating to the issues they have included within the scope of the review. The FCA welcome responses to these questions from interested parties by 31 August 2016.
If you wish to provide a response, please email it to RetirementOutcomes@fca.org.uk
