Financial Conduct Authority (FCA) director of strategy and competition Christopher Woolard has said it will be ‘very difficult’ to regulate the planned second-hand annuity market.
In April the FCA published a consultation paper which set out its plans for regulating the second-hand annuity market. This included proposals to point anyone wanting to sell their annuity to a financial adviser.
However, pension experts have raised concerns about mis-selling since the consultation paper was published.
Speaking at a panel discussion hosted by PwC this morning, Woolard (pictured) admitted the regulator would find it difficult to regulate the market.
‘We are trying to construct a system where those checks and balances are there, but it is clear this is going to be a very difficult market for us to regulate,’ he said.
Woolard said the regulator thought a market could only be succesful if everyone involved implemented the rules set out in the consultation.
‘If you implement rules and if firms follow them, we see a market that could work and function well,’ he said.
Robo not ‘second best’
Woolard also warned robo-advice should not be seen as ‘second best’ to face to face advice.
In March the financial advice market review set out proposals which aimed to encourage firms to launch online advice services. This included plans to launch a specialist robo-advice division within the FCA.
The review aimed to make it easier for people to access advice if they could not afford to pay for a full face to face service.
Woolard was asked if it was fair to say that it was better for these people to receive some form of online advice, even if it was perceived as lower quality than face to face advice.
He challenged this view, and said robo-advice firms could meet existing advice requirements to provide a full service.
‘If you are going down the robo route there’s a danger that it’s seen as a sort of second best than sitting down with an adviser,’ he said.
‘It’s possible to deliver the COBS [conduct of business rules] standards you would expect through a robo route…that may well deliver a really good outcome.’
Source: New Model Adviser