The Financial Conduct Authority (FCA) said it will focus attention on unauthorised pension introducer firms, according to its annual report, published today.
The regulator said that to protect consumers it had a particular eye on unauthorised pension introducer firms. The FCA indicated it was concerned unauthorised introducers were exploiting the pension freedom reforms.
Across all types of unauthorised investment business, including collective investment schemes, investment and insurance frauds, deposit taking and ‘boiler room’ schemes, the FCA received 8,438 reports of potential unauthorised activity in 2015/16.
‘Where needed we will also take action to enforce consumer protection, including in respect of unauthorised investment business such as collective investment schemes, investment and insurance frauds, deposit taking and boiler rooms,’ the FCA said.
‘As a result of the changes to accessing pensions, we are monitoring the market and the impact of those changes on behaviours, particularly relating to unauthorised pension introducers.’
The role of pension introducers is becoming an increasing issue for regulators. The Pensions Regulator revealed details of its own investigation into a £5.8 million scheme that placed pension funds into ‘risky’ investments and involved a number of unregulated introducer firms and a regulated IFA.
In February New Model Adviser® started probing the growing role of introducers. The FCA told us: ‘we are looking into the activities of unauthorised pension introducer firms who often initiate the pension transfer process with promises of better returns.’
In its report the FCA today highlighted its work flagging the dangers of companies offering ‘free pension reviews’. It said: ‘We have also published a series of consumer alerts to raise public awareness of unauthorised companies and specific scams, including “free pension review” offers and the dangers of investing pension monies into unregulated investments’.
Pension Wise
The annual report also addressed the effectiveness of the government-backed retirement guidance service Pension Wise.
The FCA, which is required to set the standards for the Pension Wise guiders, also announced it is exploring ways to improve awareness of the service through providers.
‘So far the designated guidance providers have delivered within agreed service levels,’ the regulator’s report said. ‘We are currently testing ways we can improve signposting to the service with providers.’
The FCA said it had met regularly with the providers to gauge the performance of the Pension Wise service, and that feedback so far from providers has been ‘positive’ regarding Pension Wise.
Secondary annuity market
In 2015 the government announced that from 2017 annuity holders will be able to sell their policies.
In a consultation paper earlier this year, the FCA said people selling an annuity on the second-hand annuity market should be recommended to seek guidance from the government’s Pension Wise guidance service.
The FCA said in its annual report it would put out proposals later this year on Pension Wise’s role within the second hand annuity market.