Round Up Spring 2019

FCA’s retirement outcomes review Following its retirement outcome review, the FCA has issued two papers, one confirming CP19/5 provides details of a further proposed package of remedies, including:

new rules and guidance, and another proposing a further package of remedies. The FCA’s final report into its Retirement Outcomes Review (ROR) focused on individuals who didn’t take advice, and raised concerns that some of these clients are at risk. The FCA has now confirmed new rules and guidance and proposed a number of further changes. Although these changes, and the new proposals, mainly affect product providers, they will be of interest to any threesixty clients active in the retirement market. PS19/1 confirms the FCA’s new rules and guidance on its first package of remedies from its ROR. These relate to: • ‘Wake-up’ packs (information sent to clients before they decide how to access their pension savings). • Information provided to clients about annuities and eligibility for enhanced annuities. • Changes to make the cost of drawdown products clearer and more comparable.

• The requirement for drawdown providers to offer a range of investment solutions to non- advised consumers, with carefully designed choice options. These will be referred to as ‘investment pathways’. • The requirement for providers to make sure consumers invest in cash, only if they make an active decision to do so. • The requirement for providers to disclose to consumers who are beginning to draw on their pension, how much they’ve actually paid in charges (including transaction costs) over the previous year. These costs will need to be shown in pounds and pence. • An update on the FCA’s suitability guidance to remind advisers of their obligation to consider available pathway solutions when assessing suitability for retail clients, who are making a decision about drawing down funds.

FSCS publishes 2019/20 plan and budget The FSCS has published its plan and budget, setting out its proposed levies for 2019/20. The FSCS also confirms that it will apply supplementary levies to meet unforeseen compensation costs from 2018/19. • The FSCS expects to levy a total of £516 million for 2019/20, and sets out the indicative levies for the FSCS funding classes. The monetary impact of these changes on individual firms will not be entirely clear until the FCA publishes its annual fees and levies consultation in April. We’ll provide a further update at that point. • The FSCS confirms that it needs to raise a supplementary levy to cover the £78 million deficit in the life and pensions intermediation class during 2018/19. This has been allocated to the life and pension intermediation, investment intermediation and general insurance intermediation funding classes. • From 2019/20 the FSCS will collect ‘on account’ levies from firms who already pay their FCA fees on account (firms paying FCA fees in excess of £50,000). The FSCS will collect 50% of the levy (based on the firm’s 2018/19 levy) on account. • More details are available on the threesixty website. See: Regulatory developments / Other / FSCS plan and budget 2019/20.

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