The Financial Conduct Authority (FCA) has released updated consumer support guidance for pension providers and defined benefit (DB) transfer advisers during the Covid-19 pandemic.

The organisation warned that providers must still steer clear of giving regulated advice by pointing customers towards specific changes to their investments, but explained that clients should be supported with the information to make well-informed decisions.

The updated guidance was released just after the FCA confirmed that the implementation of new default investment pathways would be delayed by six months as a result the current crisis.

Because of the recent market volatility caused by coronavirus, the FCA said it was likely that consumers might contact their pension provider to discuss whether the value of their pension had been affected, changing pension investments or accessing the funds held in their pensions.

The regulator commented that consumers wanting to withdraw funds from their pensions early should still be notified of the availability of free and impartial pensions advice, encouraged to take regulated advice, questioned to identify possible risks and be provided with appropriate warnings of the implications associated with their actions.

Providers were also encouraged to bring concerns up with consumers where it was possible they might make a decision that was not in their best interest, though these warnings must not amount to personal recommendations.

The FCA provided a list of possible risk factors that could be particularly prevalent in the current environment, including sustainability of retirement income, tax implications, charges and investment risk.

The Investing and Saving Alliance strategic policy director, Charles McCready, said: “This comes hot on the announcement of the FCA Business Plan 2020/21 which includes a focus on better consumer outcomes.

"This will allow firms to provide more constructive support to the non-advised market, being over 90 per cent of adults, will cover investments and pensions, and comes at a critical time for consumers.”

McCready noted that the move would “help UK households avoid making detrimental decisions at a time of significant market volatility” and added that it has come “at a time that pension statements are being issued and firms can now provide much needed enhanced support to customers”.

In regard to DB transfer advice, the regulator said advisers are expected to continue following existing handbook rules and guidance.

The FCA commented that it is likely that more consumers will take advice about transferring from DB schemes to defined contribution schemes, but said firms should still only consider transfers if contemporary evidence demonstrates the move to be in the client’s best interest.

In cases where consumers want to transfer against advice they received before the crisis, the FCA stated that firms should consider whether their circumstances have changed and revisit advice if appropriate, though key warnings must be repeated.

Aegon pensions director, Steven Cameron, said the guidance “provides more clarity on what providers can ask or say to clients”, before praising the fact that it covered “the situation where individuals over 55 may be looking to take money out of their pension and also where those across all ages are planning to switch from one class of investment to another”.

“There is a real risk that in the present times of crisis, some individuals may be tempted to rush into decisions without taking advice, which might not be in their best long-term interests. The new guidance means their pension or investment provider may be able to help identify when an alternative solution may be available, possibly saving the customer from paying more in tax or losing the opportunity to benefit if stock markets rise in future,” concluded Cameron.

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