The Financial Conduct Authority’s Retirement Outcomes Review appears to be a “regulatory cry for help”, Hargreaves Lansdown head of policy Tom McPhail has said.

Responding to the regulator’s report, published today, 12 July 2017, the industry noted that the review of today’s pension system reveals its considerable failings. Both the Pensions and Lifetime Savings Association policy lead Tim Gosling and Barnett Waddingham senior consultant Malcolm McLean said the FCA’s review “makes for disturbing reading” and presents findings that “are extremely worrying”, respectively.

Old Mutual Wealth head of retirement policy Jon Greer opined: “The report confirms that constantly changing policies is hurting the savings culture and a consultative approach to policymaking could help make that culture more healthy and sustainable.”

McPhail commented: “The FCA seems to be trying to put the pension freedom genie back in the bottle. The liberalisation of pensions has proved very popular with investors but this regulatory review highlights some of the shortcomings in the system.”

Most noticeably, the report indicated that there is a growing number of people taking advantage of the pension freedoms without taking any form of advice.

LV= managing director of life and pensions John Perks said: “The pension freedoms have given retirees welcome flexibility at retirement but the regulator's review reiterates the growing issue of people accessing their money without taking advice. Professional financial advice is by far the best way to ensure people are able to make the right decisions at retirement and that their income meets their needs in the long run, but too few people take it up.”

Perks added that: “Without action to address this issue [lack of people taking advice] we will face a ‘mis-buying’ crisis of consumers making important financial choices without adequate support.”

Nonetheless, Greer commented: “Consumers simply cannot afford to take advice at the point of retirement. Therefore, the FCA is right to look at increasing consumer protections where people are either unable to unwilling to take advice.”

In addition, with the increasing trend to move money out pensions into other savings using the pension freedoms, the need for advice has been emphasised further. “Consumers are facing incredibly difficult decisions and are not getting enough support to make choices that lead them to the best outcomes,” Just Group director Stephen Lowe said.

Moreover, industry opinion has been divided on whether new retirement income products are required.

Intelligent Pensions technical director Fiona Tait explained: “What we need are better ways to help individuals manage their drawdown plans rather than complicated new product structures. The FCA’s point about improving tools and services is spot on”.

While Gosling said: “We need a new generation of high quality retirement income products. These need to have strong independent governance and be suitable for those needing an income but who do not have access to advice”.

Redington head of DC also noted that: the decline of annuities and weak product innovation could lead to limited competition and worse access over time”.

McPhail added that the regulator has: “Expressed concern about a lack of competition in market place, yet the majority of the measures proposed here seem likely to stifle competition: better investor engagement is likely to lead to better competition”.

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