FCA called upon to clamp down on IFA 'spam' letters

The Financial Conduct Authority (FCA) has been urged to question overzealous financial advice firms by The Investing and Saving Alliance (Tisa).

The comments from Tisa were in response to a report from The Telegraph, which said some firms had been sending unsolicited "spam" letters to savers, saying that they could cash in their retirement pots early by using pension freedoms.

Tisa strategic policy director, Charles McCready, said: “The FCA should be reaching out to these firms to question their motive and the suitability of the advice they are offering their customers.”

The article raised fresh concerns regarding certain fee structures, which can see advisors only receiving a fee if customers follow through with the advice they have given.

McCready commented that it was “deeply worrying” that firms would proactively inform customers that they could access their pension more than a decade ahead of retirement, warning that “if people do cash out, they will lose 10 years of potential growth”.

“We are also concerned that the values of pension pots across the board may well have been impacted by volatile markets as a result of Covid-19, and so those who are encouraged to cash in early risk crystallising those losses.”

He also recommended that savers who might be tempted to cash in early in order to pay off debts “speak to StepChange, Citizens Advice or another credible debt advice charity to find a solution that fits their individual situation”.

“The fact that these sorts of financial decisions would even be considered further re-enforces the insufficient levels of financial knowledge amongst general population, highlighting the crucial role that financial guidance and advice services continue to play in ensuring the financial wellbeing of all savers,” added McCready.

The news comes as many corners of the pensions industry have urged savers to avoid making snap decisions on changes to their pensions amid the coronavirus crisis, with Pensions Minister Guy Opperman having stressed caution earlier this week.

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