Many consumers are taking out drawdown pensions without seeking regulated financial advice, the Financial Conduct Authority (FCA) has warned.
The FCA revealed that, before the implementation of pensions freedoms in April 2015, 5% of drawdown was purchased without advice, compared to 30% now.
A range of measures to address the issue have been proposed by the FCA, including gathering evidence on ‘consumer outcomes’ in order to assess whether extra protections should be put in place for those who choose to buy drawdown without obtaining expert advice.
The FCA has also urged the government to consider allowing individuals to access their savings early without being required to make a decision about the remainder of their pot.
Commenting on the issue, Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said: ‘Since the introduction of the pension freedoms, the retirement income market has changed substantially.
‘We have identified areas where early intervention may be needed either now or further down the track to put the market on the best footing for the future.’