The Financial Conduct Authority (FCA) is set to monitor advisers and providers' post-Budget business models and product developments.
The FCA published its final guidance on the government's Budget pension reforms yesterday, and said it would keep an eye on changes resulting from the announcements and will intervene if it sees any potential risks to consumers.
The guidance said: 'We expect firms to review and revise their existing practices in light of this guidance. Through our forward-looking supervisory work we will also be monitoring changes to firms' business models and new product developments arising from the Budget so we can intervene early if we see any risks to consumers.'
The FCA said in light of the government's announcements, firms will need to make changes to their operational processes and procedures and also consider how to treat customers who are making retirement income decisions in the period up to April 2015 where a number of changes will be implemented.
The guidance is aimed at pension providers, advisers providing retirement income and execution-only services selling annuities and income drawdown.
For customers who are within their 30 day cancellation period for an annuity, the FCA expects advisers to consider whether their recommendation is still suitable in light of the changes and re-contact their clients as 'quickly as possible' to explain the changes and advise if a different course of action is suitable.
The same expectation is given for advisers with clients who have applied for or in the process of applying for income drawdown shortly before the Budget but are still within the cancellation period.
For customers who are currently taking an income from a drawdown product, the regulator said it would be good practice if advisers contacted all their clients regardless of service level and inform them of the changes and review the decision agreed with the customer where possible.
To read the full guidance click here.
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