A review of the retirement income market was already underway when the Chancellor announced the wide-ranging changes in his Budget speech on 19 March. The FCA has now released updated terms of reference for the study, taking the future changes into account.
The market study was originally investigating whether there are “obstacles to competition working more effectively for consumers in this market”. It followed the regulator’s thematic review of annuities.
“In light of the Budget changes we will also look to understand how consumers, providers, and distributors are likely to behave in the new market landscape in order to assess potential competition risks and vulnerabilities (e.g. complex and opaque product innovation).
“Although the true impact of the government’s reforms is likely only to be known after some years, many of the features of the market we are concerned about may persist. There are also new issues that we will need to consider,” it said.
Issues such as market competition, the new market landscape, value for money before and after the changes, and how consumers, providers and advisers might behave in the future are also now being considered.
Sales tactics of annuity providers were originally going to form part of the review, the FCA said. However, this will now be conducted as a standalone thematic review which will report by the end of the year.
It added: “Good and poor practice identified through this review will to feed in to the market study and will also form part of the evidence-base for the development of the guidance guarantee.”
It will also feed into the consultation on the implementation of the guidance guarantee.
The FCA said the interim findings from the study, originally due out in the summer, would now be published later this year. People now have until 18 July to submit their opinions to the watchdog.
To view the revised terms, CLICK HERE.
