SPP offers feedback on FCA’s new consumer support strategy
The Society of Pension Professionals (SPP) has issued a response to the Financial Conduct Authority’s (FCA) recent consultation, aimed at enhancing decision-making support for consumers in the pensions and investment sectors.
The FCA’s initiative, titled “Supporting consumers’ pensions and investment decisions: proposals for targeted support”, introduces the concept of targeted support, which is intended to help firms provide more personalised guidance to specific groups of consumers.
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The FCA’s consultation document also presents preliminary thoughts on the simplification of financial advice and the clarification of the boundaries between advice and guidance.
This is part of the regulator’s strategy to support policy development, underpinned by consumer research to assess the effectiveness of targeted support.
In its response, the SPP acknowledged the potential benefits of targeted support but pointed out several areas where the proposals could be enhanced.
A notable suggestion from the SPP pertains to the language used in the consultation.
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By GlobalDataThe SPP recommends using the term “better position” over “better outcome” to describe the goals of targeted support.
The rationale behind this preference is that “better position” more accurately reflects the intended purpose of the support and is more quantifiable.
Additionally, this terminology helps to distinguish the new proposals from existing FCA Consumer Duty language, thereby reducing the risk of confusion.
The response said: “In some areas, the current proposals will restrict the level of support that could be made available to consumers and could therefore be detrimental to consumers. For example, in relation to decumulation and annuities.”
SPP also raised objections to the suggestion of omitting the consolidation of pension funds from specialised assistance.
“It is not clear to the SPP why a recommendation to consolidate into or out of a particular product for the purpose of pension consolidation should be excluded from targeted support.
“In both the accumulation and decumulation phases, consolidation may be an integral piece of any suggestion to achieve a better outcome, the proposals to exclude targeted support in relation to consolidation also appear to be inconsistent with wider policy objectives to promote consolidation and encourage members to seek better value for money,” it stated.
For the targeted support such as around direct marketing rules, SPP urged the FCA to, “… make a clear differentiation between existing authorised firms seeking to add targeted support to their permission, and firms seeking new authorisation to be able to offer targeted support.”
SPP Financial Services Regulation Committee chair Amanda Cooke said: “The SPP supports the concept of targeted support and is keen to ensure these proposals deliver for consumers. That’s why we’ve highlighted areas of concern, likely barriers to success and a range of suggested improvements.
“We look forward to continuing to work with the FCA in a spirit of collaboration to make targeted support the best it can be.”
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