The recent Regulatory Priorities report from the FCA aims to ensure consumers are able to safely plan pension investments. Thistle Initiatives Consultant, Sophia Ioannou, looks at the report, its priorities and what it means for firms.
The FCA has published a Regulatory Priorities report on pensions, aiming to ensure that consumers can safely and confidently plan secure pension investments. The aim is to continue to support consumers while government reforms drive significant pension changes. The report is relevant to life insurers, Self-invested Personal Pension (SIPP) operators, investment platforms, advisers, wealth managers and asset managers.
The FCA’s Regulatory Priorities for pensions focus on four main areas:
The FCA expects firms to provide feedback on the proposals for the Value for Money (VFM) framework and the rules allowing saver transfers. Firms should take steps to ensure savers are not left in workplace schemes that may be underperforming and consider actions, such as adjusting investment allocations or moving members to more suitable arrangements. Although the VFM framework is mainly aimed at workplace pension schemes, there is also scope to improve the pricing and overall value of non-workplace pensions.
Workplace pensions are expected to undergo significant change in the near future as the government is increasingly focused on achieving greater scale and encouraging competition based on value.
Firms should prepare for the upcoming scale test by working with the FCA when considering structural changes, such as changes or acquisitions and by evaluating how these developments may affect their operations.
Firms that offer or advise on personal or group pensions and retirement income products have an important role in helping consumers navigate the pensions market and make informed choices. Firms should consider how best to support consumers in understanding their options and making confident financial decisions in light of market changes.
Collaboration with the FCA and other stakeholders will be essential to ensure that the regulatory framework continues to deliver positive outcomes for consumers. The FCA welcomes feedback from firms on potential areas of reform, and discussions will continue around targeted support journeys and the wider Advice Guidance Boundary Review.
Firms should review how they allocate investments, including exploring opportunities in private assets when these are likely to benefit savers. They should take into account the recommendations from recent FCA reviews on private market valuation practices.
Controls and governance structures should be robust and reviewed, particularly where investment strategies expand to include a wider range of asset classes or involve performance-based fees.
Firms that manage legacy pensions and long-term savings products, including life insurers, play a key role in ensuring a more efficient and consumer-friendly pensions market.
The FCA would like to hear from firms about the challenges that result in increased costs and make it harder to improve outcomes for consumers. Firms are also encouraged to provide feedback and help test innovative solutions.
Firms should ensure that they engage proactively with the FCA in providing feedback on the proposed areas of reform and the challenges they face, as this can help shape solutions. Governance and control frameworks should be reviewed to consider business strategy changes, ensuring they remain robust and appropriate.
Sophia recently joined Thistle as a Consultant in the Investment Wholesale team. She holds a Bachelor of Science in Psychology from the University of Nottingham and brings a strong foundation in investment compliance. Before joining Thistle, she worked at a hedge fund where she supported regulatory development projects and contributed to policy reviews, giving her practical insight into how firms adapt to emerging requirements. She has also completed the CISI Introduction to Securities and Investment and Global Financial Compliance modules, which further strengthened her technical knowledge.