New regulations expected to be published in Q1 this year by the Financial Conduct Authority (FCA) could risk “dramatically reducing” the supply of advice for defined benefit (DB) members, according to Aegon.

The concerns follow the FCA’s 2019 consultation, Pension transfer advice: contingent charging and other proposed changes, which outlined plans to ban contingent charging that many advisers feared could increase the cost of advice to savers.

Commenting on the expected regulations, Aegon pensions director, Steven Cameron, said: “The big concern is, no matter how well intentioned the latest interventions are, there’s a risk of dramatically reducing the supply of advice in this key area.”

“We’ll soon know if the FCA is proceeding with its proposed ban on contingent charging and how the carve outs for certain vulnerable individuals will work.

"Importantly, I hope to see some development of the ‘abridged advice’ proposals, ideally making this approach more cost effective and safe for advisers to use to weed out those who should not be considering transferring.

“We’ll also see how strongly the FCA will expect advisers to favour workplace pensions over individual pensions as the receiving vehicle. This will all come alongside further suitability assessment work.”

The firm has also predicted a further consultation on aspects of non-workplace pensions based the FCA’s analysis completed last year.

Cameron explained: “This is likely to focus on disclosure and charges but could also take forward the concept of investment pathways for non-advised customers accumulating in non-workplace pensions.”

The FCA has already confirmed the introduction of investment pathways for drawdown products in mid-2019, a move which industry experts have recently suggested could see a “huge drop” in pensions mis-selling .

Cameron also drew attention to the FCA’s open finance call for input, which closes in March, stating: “Allowing customers to grant their adviser access to their pension and investment data could have far reaching implications for advisers and could once more open up questions on the definition of advice and guidance. Expect much more to come in this developing area.”

Cameron added: “The FCA is also working more closely with The Pensions Regulator. We can expect to see more on its analysis of the complete pension journey and proposals on a consistent framework across contract and trust based schemes for assessing value for money.

“One of the successes of IGCs has been their ability to tailor value for money assessments to their provider’s client base. So I hope we don’t see too much prescription here.”

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