The Financial Conduct Authority (FCA) has written to the heads of advice firms following a review into retirement income, as the watchdog painted a mixed picture.
It said there were “examples of good practice” but also instances where “firms were not taking account of the needs of their customers”.
This comes after the FCA launched a review into the issue, amid fears some employees were not getting the best pension deal after they retired.
In an address to chief executives of financial advisers, the FCA said it recognises the “picture across different firms varies”.
It said the review found “examples of both good and poor practice” but warned that “that some firms may not be meeting the needs of their customers, potentially leading to poor outcomes”.
The FCA noted five key areas of improvement, including income withdrawals, risk profiling not being evidenced, a failure to get details from customers relating to advice and suitability, a failure to periodically review situations, and “inaccurate or insufficient records held as the control framework”.
The regulator said firms should look at these key areas to “help raise standards and deliver good
outcomes for customers”.
The FCA hasn’t released a list of which firms had been written to, however, the number was around 5,500.
Sarah Pritchard, Executive Director of Markets and International, at the FCA said: “Financial advisers have a vital role in helping consumers to make the right decisions now to support them long into the future. Decisions for consumers approaching retirement are complex, with the potential for risk. We want to support a sector that can help consumers access pension benefits, invest with confidence and have a sustainable income when they retire.”
Pritchard added: “Some firms are getting this right and making a real difference to their customers. However, others are not even getting the basics right and putting their customers’ futures at risk. We urge all firms to take on board our findings and review their own processes. Where they do not, we will act.”
The FCA put forward three steps for firms following the letter. It asked them to use the “steps to address the review’s findings”, as well as use its newly-published advice assessment tool (RIAAT) and cash flow modelling guide.