Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the adequacy of the regulatory and governance standards in the pensions industry in ensuring that drawdown products are appropriate for consumers.

The Financial Conduct Authority (FCA) is the regulator of pensions decumulation products, including drawdown products.

The FCA conducted the Retirement Outcomes Review into the retirement income market, publishing the final report in 2018. The final report particularly focused on investment choices and charges in drawdown. As a result of its findings, it is introducing or consulting on a number of remedies to protect consumers from poor outcomes and promote competition in the market. These include the introduction of investment pathways and a requirement for consumers entering drawdown to receive clearer information on charges. The FCA is also currently consulting on extending the remit of Independent Governance Committees (IGCs) to investment pathways.

As the remedies will be a significant intervention in the drawdown market, the FCA plans to conduct a detailed review of the impact of investment pathways one year after implementation to consider how well the remedy is working.