Providers ‘must do more’ for savers in legacy pension products – FCA

People holding legacy pension products that are now closed to new savers could be receiving poorer value than those in newer ones, the Financial Conduct Authority (FCA) has warned.

Its analysis noted that while some providers were using good practices, complex charging structures, older product design, and weaknesses in firms’ data meant some pension savers were not getting as much value as they could.

The regulator’s review of unit-linked pensions and savings found that some non-workplace providers were working to simplify or rationalise their legacy products and funds, or had plans to do so.

These actions included capping or reducing charges for customers in legacy products, while some were comparing outcomes across different consumer groups and moving customers to better-value alternatives.

In light of the findings, the FCA called on all pension providers to consider its report and enact the good practices identified in it.

The regulator also stated it was engaging with firms on barriers they face in improving value for customers, especially in closed books.

Firms were encouraged to actively identify areas of poor value in legacy books and act where necessary to ensure compliance with the Consumer Duty.

"Consumers in older products should not be left behind, and the good news is that some firms are already showing it doesn't have to be this way,” commented FCA director of cross-cutting policy and strategy, Charlotte Clark.

“We want to see that progress reflected right across the market.”

This article originally appeared in our sister publication Pensions Age.

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