“What you don't want is a client saying that they didn’t understand. Historically a lot of advisers have effectively made risk reward decisions for their clients without the ability to explain the elements of those decisions.”
Northway felt there would now need to be a far greater assurance that clients understand the risks involved in their plan and why the adviser thinks these risks are appropriate for that particular client.
Last month (April 30), speaking as part of a panel discussion at the FT Adviser Retirement Income briefing, Kate Tuckley, head of department, consumer investments at the FCA said the regulator was “actively” considering whether pensions decumulation should be included within the scope of its advice guidance boundary proposals.
Northway said this was a “pragmatic” approach and felt it was a good step forward by the FCA.
He said: “There is a significant amount of decumulation decisions being made on an unadvised basis at the moment and that's being made with the benefit of having very little knowledge in a lot of cases and very little guidance.
“The ability for a framework or a set of guidelines to be passed to unadvised individuals has got to be a benefit because these things can always be misused in a product sense by somebody over-egging the benefits, so it needs to be policed.”
alina.khan@ft.com
