UK pension scheme members still risk being left behind unless the Financial Conduct Authority's work on the advice guidance boundary implements the targeted support regime properly, XPS Pensions has warned.
Sophia Singleton, partner and head of DC for XPS Pensions, said on the question of the advice guidance boundary, which closed for feedback at the end of February, there is still a "significant part of society" that has been "poorly served".
Talking to FT Adviser, Singleton said: "Our view is that although the FCA have worked over many years to improve outcomes for consumers, their focus has traditionally been on those with access to regulated advice.
"This has meant that a significant part of society, who do not obtain regulated advice have been poorly served.
"At XPS we have been concerned that this can result in unadvised pension scheme members relying on help from unregulated sources (such as social media) and it increases the risk of scams."
For these reasons, Sheppard said XPS supported the FCA’s proposal to create a new targeted support regime, which sits between guidance and regulated advice.
In essence, the regime would enable firms to use limited personal information about a consumer to provide better support, placing customers into target markets and making more tailored suggestions to consumers, based on their circumstances.
She said: "If implemented in the right way, this should help pension providers close the gap between those who access advice and those who don’t.
"We also support the proposal to provide further clarity on the advice/guidance boundary - this will help many of our clients, particularly pension scheme trustees, understand where the line between information and promotion/advice sits."
Joint working
XPS contributed to, and was supportive of, the response provided by the Society of Pension Professionals to the FCA's Advice Guidance Boundary Review.
In its four-page February response submission, seen by FT Adviser, the SPP said: "SPP believes the FCA’s proposal to create a new targeted support regime, which sits between guidance and regulated activity, could create an opportunity for firms to be able to better support consumers but only if properly considered and carefully implemented."
However, it added more regulatory oversight and collaboration would be needed to make sure the pensions market - especially trustees - were given the "clearest guidance" to help members get the best possible outcome.
Currently, the SPP said it was concerned that past attempts to work together with government and other bodies has not always had the best regulatory outcome.
The response added: "The SPP is pleased to note that the FCA has indicated in DP 23/5 that it intends to work closely with the DWP as their respective work progresses.
"However, on previous occasions, joint working has not necessarily led to regulatory alignment, instead resulting in varying requirements - for example, the stronger nudge to pensions guidance.
