The FCA has set out plans for a new consumer duty designed to raise the level of consumer protection as FTAdviser reports.
It does seem to signal a radical shift if not in the nature of regulation, then certainly in the content. The three elements are as follows
The consumer principle - the wording being consulted on is: 'a firm must act in the best interests of retail clients' or 'a firm must act to deliver good outcomes for retail clients'.
Cross-cutting rules will require three key behaviours from firms: taking all reasonable steps to avoid foreseeable harm to customers, taking all reasonable steps to enable customers to pursue their financial objectives, and to act in good faith.
A suite of rules and guidance that set more detailed expectations for firm conduct in relation to four specific outcomes – communications, products and services, customer service and price and value.
It is a substantial change though it would be great to hear advisers’ views on this in more detail.
Elsewhere there was more regulation.
Trustees and scheme managers will have the power to halt pension transfers or seek further information from transferring members under new proposals from the DWP, Pensions Age reports.
If the receiving scheme is deemed low risk or if a link to a occupational scheme can be demonstrated by the transferee, then the DWP suggests that a transfer should be much easier.
However, trustees or scheme managers will be required to search for red flags, the presence of which should lead to them halting the transfer, or amber flags requiring them to ensure that the transferring member has received scams guidance before proceeding.
It is interesting to see the difference between what might be loosely described as the occupational pensions press and the IFA press, which quote those who are more concerned about overregulation.
To that end, in Money Marketing, AJ Bell has warned that thousands of legitimate transfers to mainstream pension providers could be blocked. It says this could occur in cases where customers can’t or refuse to answer these prescribed questions.
It suggests that the existence of “safe destination” list could see consumers interpret it as an endorsement by DWP.
Nearly eight in ten employees have a workplace pension today compared to less than half of people when auto-enrolment was introduced in 2012, according to a report by the Office for National Statistics (ONS) as Professional Pensions reports.
Fidelity International has scrapped the variable management fee share classes available on its open-ended funds since 2018 due to lack of interest.
This in interesting in the context of the debate about the fairness of charges for active management. Maybe investors want a fixed percentage fee.
