The Financial Conduct Authority (FCA) has launched a consultation into the standards of support expected of Pension Wise for those considering selling an annuity upon the launch of the secondary annuity market.
The government will remove tax restrictions for individuals looking to sell their annuity from April 2017.
The remit of the Pension Wise service has been extended to cover the secondary annuity market. The standards set out in the FCA’s consultation paper aim to ensure an appropriate degree of protection for those seeking guidance from Pension Wise about selling their annuity income.
The standards outline the knowledge required of guidance providers which deliver guidance on selling an annuity, the types of information the guidance provider is expected to collect from the individual, and the minimum content that the guidance provider needs to go through with the individual during a guidance session.
The proposals also include clarifying that a Pension Wise session can cover more than one appointment, clarifying that the record of the guidance session need only include relevant information provided by the individual during the session, in addition to replacing all references to HM Treasury with ‘the Secretary of State’.
The consultation will close on 4 October 2016. The final standards will be published in December 2016.
Tom McPhail, head of retirement policy at Hargreaves Lansdown, said: “For anyone not paying for advice before selling an annuity, a consultation with Pension Wise should be mandatory. The particular risks in this market are such that an independent sense-check from either a qualified adviser or from Pension Wise is a small inconvenience for the small number of investors who are likely to go ahead with such a transaction.”