Firms could take a different approach. For example, one firm included a supplementary decumulation questionnaire and discussion on retirement objectives and income needs.
Data, data, data
The FCA wants adviser firms to adopt a robust governance approach and that includes solid collection and retrieval of management information.
There are several areas in the report where the FCA pointed to this lacking. For example, in both elements of the research – the data survey as well as the advice register completed by the selected 24 firms – some firms found it difficult to provide the requested data.
This was because the information was not measured, not centrally recorded, had to be collated from different sources or systems, or could only be provided through manual extraction from individual files, which needed considerable time and effort to collate.
It feels like we have been here before with this FCA complaint.
It looks likely the FCA will follow up this thematic review with another asking for similar information, so firms may want to review their MI to establish whether they can retrieve the data if asked for it.
Review often
The FCA is expecting firms to put in the work and effort to set a robust, complete advice process.
But it is at pains to point out that this is not a one-off.
Instead, the governance framework must build in the collecting of data to support establishing consumer outcomes, monitoring them, and then, armed with that information, to regularly review and change or improve (if necessary) processes.
This will sound very familiar; it is a clear requirement of the consumer duty.
The FCA’s overall framework
Finally, the retirement income advice review is not being carried out in a vacuum.
The FCA sees it tying into other areas of its focus and work. The most obvious is consumer duty.
The timing of the review gave the FCA an opportunity to explore how firms were implementing the duty.
It is looking for clear evidence that firms are meeting the duty in this area.
It wants to see firms are specifying their target market and are designing the service to meet the needs and objectives of that market, as well as address the risks it faces.
Firms must ensure their communications are likely to be understood by customers, which may mean testing and monitoring them.
The FCA will also be looking for evidence firms have met the consumer support outcome, as well as cross-cutting rules.
Given the age of the target market, a robust vulnerable customer policy is another essential.
