Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make it his policy to introduce a charging cap on the draw down of pension products.

In June 2018, the Financial Conduct Authority (FCA) published its Retirement Outcomes Review final report. This two-year study assessed how the retirement income market has evolved following the introduction of pension freedoms. The review found that drawdown charges are complex, not consistent between providers, and can vary substantially across providers.

In response, the FCA is introducing a range of new measures, including a requirement for consumers entering drawdown to receive a first-year charge figure in pounds and pence terms. The FCA has also recently consulted on introducing a requirement for firms to provide annual information on costs and charges expressed in pounds and pence terms.

As the market is continuing to evolve, the FCA did not propose introducing a charge cap at this stage. The FCA expects the market to deliver competitive charges and is highly likely to move towards a cap if it does not.

The government welcomes the FCA’s work in this area, and stands ready to work with industry and the FCA to ensure consumer demands are being met, and any potential barriers to a thriving, competitive market can be addressed.