The FCA is to probe non-advised consumer journeys as part of a new retirement review.

Bosses said they want to know how well consumers understand their retirement income options when they engage on a non-advised basis, and whether they make informed choices.

The report, accompanying the launch of the Retirement Outcomes Review this morning, showed there are higher numbers of consumers entering income drawdown products without use of a regulated adviser.

Some 32% of reported drawdown sales from last October to December were not associated with a regulated adviser, FCA data showed.

In 2013, 97% of new income drawdown sales were sold through advice services, according to the FCA’s Retirement Income Market Study.

The FCA report stated: “This is likely to have been influenced by the type of consumer purchasing income drawdown at that time. Prior to pension freedoms income drawdown consumers typically had significant pension pots to invest and were more able to afford independent financial advice.”

Officials said with consumers accessing more complex products without advice, the FCA wants to understand whether non-advised consumer journeys have become “more complex for consumers to navigate”.

The FCA stated: “We will explore whether there is complexity that causes consumers not to engage, or leads them to being drawn towards certain products, choices and decisions.”

Jon Greer, pensions technical expert at wealth manager Old Mutual Wealth, said:
“Non-advised drawdown is a relatively new phenomenon. Before the pension freedoms were introduced in April 2015 there was effectively no such thing, and a customer also needed to have £30k per year secure retirement income from other sources before they could even consider the type of drawdown flexibility on offer today.

“As the rules have changed it is entirely right that the FCA is looking at how customers come to their decision to take their retirement income in this way.”