Pension scheme providers have been encouraged to “seize the moment” to rebuild member trust in advance of the Financial Conduct Authority’s (FCA) new investment pathways.

Retirement solutions firm Abaka said that the regulator’s new mandatory pathways presented providers with a “real opportunity” to “win back customer trust in pensions”.

It said that this could be achieved by embracing financial technology and digital solutions as a reliance on legacy technology can be expensive, inefficient and hard to scale.

The FCA’s new investment pathways come into force in August 2020, and Abaka believes that providers will have to find new ways to engage with consumers and explain the options available in accessing their pension pots.

Commenting, Abaka CEO, Fahd Rachidy, said: “We agree with the FCA’s stated objective to ‘prevent consumers from potential harms leading to lower retirement incomes’. Putting customers’ interests first is the best way to engage with them and rebuild their trust.

“With less than a year to get ready for the FCA’s new investment pathways, providers face the immediate challenge of building new solutions to educate and guide customers into suitable options.

“A reliance on legacy tech to do this, as well as traditional methods of communication like printed mailout packs or phone-based marketing services could prove to be expensive, inefficient and even non-compliant.

“However, by harnessing AI-led digital solutions pension providers have an opportunity to drive engagement with their clients and help them plan a financially secure retirement.”

The regulator’s pathways were introduced after the FCA raised concerns about the number of members entering drawdown without seeking advice.

“Everyone deserves a financially secure retirement, but to make that security a reality for many retirees the financial services sector needs to change the way it engages with its customers,” added Rachidy.

“The new investment pathways offer providers a fantastic opportunity to engage with their customers and rebuild trust in pensions.

“They are a chance for providers to take the time to realise their customers’ goals and offer them the guidance and information they need to help them make crucial retirement decisions.”

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