The FCA has warned of deficiencies in information gathering and recording, risk profiling and managing sustainability of income withdrawals in its review of good and poor examples of practice around retirement income advice.
The notice comes in response to follow-on work that it did after its Thematic Review of retirement income advice, in line with its strategy of helping consumers and supporting firms to grow sustainably.
The regulator reviewed a sample of 28 firms. This included a desk-based review of firms’ advice models and governance as well as sampling advice files using the Retirement Income Advice Assessment Tool (RIAAT).
Examples of poor practice around information gathering and recording included:
For risk profiling they included:
And for managing income withdrawals they included:
"All firms involved have been given individual feedback. We sought corrective actions including the provision of potential redress where appropriate," the FCA stated.
"We encourage all firms providing RIA to clients in, or nearing decumulation to read this in conjunction with the Review and our article on CFM and take any relevant action. We intend to issue further ‘bite-sized’ articles on other key issues impacting the financial advice and wealth management sectors and will share these at interactive events across the country."
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