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27 January, 2015   |   By Ruth Gillbe, FT Adviser   |   Market News

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Timing of FCA's 'second line of defence' will be crucial

Advisers are supportive of the Financial Conduct Authority’s decision to impose a ‘second line of defence’ on consumers accessing the new pension freedoms, however one adviser warns that it may come too late for many retirees. 

Yesterday (26 January) a ‘Dear CEO’ letter sent by the FCA to providers set out expectations that firms should ask clients specific questions around their circumstances, give relevant risk warnings and refer to guidance services or regulated advice.

The surprise move follows comments made by pensions minister Steve Webb in an exclusive interview with FTAdviser, who said he was putting pressure on the FCA to loosen restrictions on providers to allow them to question clients without straying into advice.

Andrew Pennie, marketing director of retirement advisers Intelligent Pensions, said that while it can only be a good thing that people are made aware of the possible implications and risks, the timing of the ‘second line of defence’ will be crucial. 

“Our only reservation is the timing of these messages and warnings. Like the ‘guidance guarantee’, the second line of defence will come too late for many retirees. 

“We know wake-up packs don’t work and standardised approaches to DC decumulation are no longer appropriate. Everybody’s retirement will be different and we need fresh thinking and a more personalised approach to decumulation if we are too see the desired overall improvement in retirement outcomes.”

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