It told firms to make sure they reviewed the business and strategic impact of A-day (the day new pension tax simplification rules takes effect, April 6 2006) in order to avoid potential loss to consumers.
In a keynote address to financial advisers, FSA director, Sarah Wilson, said pensions providers should be preparing for A-day to ensure that their systems and controls, including IT and other legacy systems, are adequately updated to cope with the changes, and to enable them to provide accurate pension projections and benefit statements. Advisers need to be aware of the impact of A-day and discuss relevant issues with affected clients. They should also ensure that they receive appropriate training to enable them to give suitable advice.
Sarah Wilson said: "A-Day is very significant for those who deal with the complexities and intricacies of pensions on a regular basis, and who advise consumers on a product which they find particularly baffling.It is clear that much work is going on in many firms but, with just six months to go, both firms and advisers now urgently need to start planning for the changes if they have not already done so.
While many consumers will not be affected by the new regulations, the FSA considers that the challenges for pension providers and financial advisers are substantial, and we are treating the risks associated with A-Day as a priority.We are currently looking at the state of readiness of a sample of regulated firms, and will use this information in future discussions with the industry. "
Consumers will be looking to advisers and pension providers for help when considering their pension choices including when to retire, changes in regulations on releasing tax-free sums and the introduction of a lifetime allowance for pension savings.
Also touched on in the keynote address were the FSA's plans to consult on a proposal to increase the number of advisers authorised to sell Pension Term Assurance, the expected consultation by the Treasury on the regulation of personal pensions including SIPPs (Self Invested Personal Pensions), the "Treating Customers Fairly" initiative and the early days of depolarisation.
