Written by Richard Parkin, Head of Retirement at BNY Mellon Investment Management
With the Consumer Duty finally live, the big question now is how the FCA will apply the Duty in its supervisory activity. Firms providing retirement income advice are likely to find out pretty soon.
The regulator has made it clear that its thematic review of retirement income advice, which is well underway, will be an important indicator of how firms are implementing the Consumer Duty”. Until the findings are published, expected to be the end of this year, there is probably not much advisers can or need to do, but it is worth thinking how their retirement advice propositions could be perceived.
The FCA will be looking very closely at the value of ongoing advice and product suitability, and these areas cut across the Consumer Duty outcomes.
A potential challenge for the review is the change in the environment for retirement income advice, which is very different now from that we have experienced since pension freedom. With increased market uncertainty, higher interest rates and the cost of living still not under control, the shape of retirement advice and the solutions used are likely to change. It’s vital that this change of environment is recognised by the FCA and that they understand how firms are adapting their advice approaches to accommodate this.
Through our work with advisers, we know firms are thinking hard about how they respond to this challenge. Approaches are developing, and it is evident that difficult environment for retirees renders professional support more valuable than ever.