LONDON, June 28 (Reuters) - Britain’s markets watchdog said it might cap charges on customers who draw on their pension pots under new “freedoms” introduced three years ago.
In its review of how the pensions market was opened up published on Thursday, the Financial Conduct Authority recommended further measures to protect consumers who are making critical financial choices.
“The FCA found that, while consumers have welcomed the freedoms, some are at risk of harm,” the FCA said in a statement.
It singled out how consumers draw down money, or using a pension pot to provide a regular retirement income by reinvesting it in funds designed for this.
Doing this does not always provide value for money, the FCA said.
“The FCA found that charges vary considerably from 0.4 percent to 1.6 percent between providers and can often be complex, opaque and hard to compare,” it said.
It wants pension providers to offer “investment pathways” for customers that set out more structured options on what to do with money taken out of a pension.
“If firms fail to introduce investment pathways with appropriate charge levels, the FCA has not ruled out introducing a cap on drawdown charges.”
Reporting by Huw Jones; editing by Jason Neely