Unsafe harbour

SallyG

http://www.pensions-institute.org/IRRISummary.pdf

"The customer will choose from a set of safe harbour products approved by the regulator.
The purpose of the decision tree is to identify the products that are most suitable for meeting the customer’s needs.
To be feasible, any default pathway using a decision tree would need to be aligned with the guidance guarantee process in a way that it is not classified as regulated advice or a personal recommendation.
This is because a decision tree is advisory – not advice – and so would be granted safe harbour status.
Any adviser or provider making use of such a retirement income plan would be protected against future mis-selling claims."

mgdavid

eh?
were you trying to make a point? Perhaps you hit Enter before the post was finished.

SallyG

How can a retirement income plan with automatic immunity from mis-selling claims be called a safe harbour for decumulators?
Maybe they mean a safe harbour for advisers and providers?

dunstonh

SallyG wrote: »

How can a retirement income plan with automatic immunity from mis-selling claims be called a safe harbour for decumulators?
Maybe they mean a safe harbour for advisers and providers?

I wouldn't be too worried about it. The FCA have said they do not intend to approve products. Mainly as they don't have the resources to check every product on the marketplace and they do not want to stifle competition and innovation.

They have historically been against flow charts/decision trees as they have a failure rate that has been deemed to high. I think the last bit of research showed 1 in 4 ended up with the wrong result and the only way to reduce the error margin was to make the flow chart longer and more complicated but you could not eradicate it.

The regulator has also said that it does not want to reduce consumer protection.

An organisation making suggestions for changes is no different from you putting your ideas forward. The FAMR may well result in a change of view in some areas but the current info coming out is that they are looking to reduce the cost of advice by removing some of the burdens and requirements on small firms.

However, at the same time, another part of the FCA has said that due diligence and research, whilst largely good at the moment, needs to improve further.

SallyG

I'm enjoying reading the report as an overview - no idea how accurate/apolitical it is - but there's no getting away from that big list of risks on page 6/7 - particularly mental impairment.................