The Financial Conduct Authority’s (FCA) new investment pathways for drawdown providers and customers could lead to a “huge drop” in pension mis-selling, according to APJ Solicitors.

Around 30 per cent of savers who opt to drawdown their pensions do so without consulting a financial adviser, and the FCA hopes that its new pathways will better protect their retirement savings.

The pathways will force drawdown providers to offer savers the choice of four options which describe their retirement savings plans – “no plans to touch their money within five years”, “want to set up a guaranteed annuity within five years”, “want to start taking a drawdown income” or “withdraw all their funds”.

Once they select which best describes them, they are provided with a pathway which best suits their requirements and plans.

Pension freedoms, introduced in 2015, had led to an increase in drawdown customers, when previously savers typically bought an annuity with their defined contribution pension pot.

Drawdown is typically riskier than purchasing an annuity, as if people make the wrong decision it can leave them with an inadequate income in retirement.

Commenting on the introduction of the pathways, APJ Solicitors compliance solicitor, Andrea Murray, said: “The FCA estimates that 100,000 people enter drawdown each year without seeking appropriate advice. This can lead to people making risky investment decisions, and leaves savers open to scammers looking to target people with large sums of available money.

“The FCA has seen mis-selling complaints skyrocket regarding pensions, so it’s good news that they are bringing in a framework to help people make wiser decisions.

“This year, we have definitely seen a step change when it comes to the industry waking up to mis-selling, poor advice and bad conduct by financial advisers and firms.

“We welcome any changes and any structures that finally puts a stop to unscrupulous firms, individuals and scammers taking money from hard working Brits.

“We have helped hundreds of pension savers claw back some of their money after losing out to bad advice and to fraudsters, so the fact that the government, the FCA and the wider industry is coming together to tackle the bigger issues can only be a positive step.

“Perhaps 2020 will be the year when we see a huge drop in mis-selling, better education for British savers and the end of fraudulent activity regarding hard-earned pension pots.”

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