Misselling is a risk of pension reforms, FCA chief tells MPs

The Budget pension reforms do pose a risk of leading to misselling, the FCA's chief executive has admitted, following concerns raised by MPs. Martin Wheatley told the Treasury Committee this morning that this was always a possibility, while also revealing the regulator has held discussions over worries about exit penalties, recently raised in the national press. MPs grilled Mr Wheatley on a variety of matters surrounding the overhaul of retirement income, arising from the Budget in March. {desktop}{/desktop}{mobile}{/mobile} Tom McPhail, head of pensions research at Hargreaves Lansdown, warned earlier this year that these could amount to "nothing more than a misselling charter". Asked by MPs if he thought misselling could arise, Mr Wheatley said "that's always a risk".But he stressed "the selling part of the regime" will be done either through IFAs or product providers, and will be covered by regulation, just as it is now.The advisory side will be fully authorised and regulated as it is today, he added.MPs also quizzed him about exit penalties, raising comments from last weekend's financial press.They said next April might be a "real shock for pension holders where contracts are silent on issue of exit penalties" based on these reports.Mr Wheatley was asked if he was worried about it with commentators suggesting "it's something not thought through".He said the FCA will look through any disproportionate exit penalties not in contracts.He said: "If they weren't part of what were entered into we would absolutely be looking at it."He said it had been flagged up as a potential problem, saying: "We have had a number of conversations where people are concerned about it."Mr Wheatley added that he has seen nothing yet to be concerned about in terms of new products likely to come to market, arising from the Budget reforms.MPs also quizzed him over concerns the new retirement service, created through the guidance guarantee, would provide superficial not personalised help.He said: "It's not advice in the regulated sense, it's generic guidance, saying 'this is where you should go next'."It's very much the front end and signalling for where you might need to end up."Asked if it would really be of help to people and if it was simply about directing them to an adviser, he said: "It might be perfectly adequate."For people with "more complex requirements" it will "almost certainly" be about directing consumers towards professional advice, he said.Regarding the efficiency and capability of the Money Advice Service as one of two delivery partners for the guidance service he said he felt these questions were due to historic criticism over marketing budgets not being well spent.What is relevant now is how the MAS is geared up operationally to deal with scale of this particular challenge, he said.

Misselling is a risk of pension reforms, FCA chief tells MPs

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