FCA: pension freedoms have increased risks

The introduction of pension freedoms has contributed to a “significant risk of harm” to consumers, according to the Financial Conduct Authority (FCA).

Brought in in 2015, the freedoms allow over-55s a range of options for their pensions. But, the FCA warns, they have “part driven” higher risks, by leaving consumers facing difficult decisions and vulnerable to fraud.

The FCA is tasked with protecting consumers from bad conduct in the financial services industry. In its 2020/21 Business Plan it notes the risk of losses and fraud in the pension investment market, which has been “part driven” by giving consumers additional responsibility for complex investment decisions. Frauds can have what it describes as “catastrophic” consequences, with those who have been scammed losing an average of 22 years’ worth of pensions savings.

In response the FCA is consulting on support for an industry-funded consumer information campaign to support decision-making by those investing in pensions.

https://www.fca.org.uk/publication/business-plans/business-plan-2020-21.pdf