Pension reform proposals put forward by the FSA do not address the growing pensions crisis and will ...
Pension reform proposals put forward by the FSA do not address the growing pensions crisis and will only make matters worse, the Consumers' Association says.
The City regulator today has been criticised both for being "naive and self-defeating" in its attitude, and for pursuing policies that will not help to persuade consumers to save.
The CA outlines its criticisms in a new report: "Plugging the pensions gap: is industry up to the job?".
Through the report, the CA indicates that it believes reforming the UK pensions system is one of the major public policy challenges facing the country.
Highlightning the urgency of the problem, the association says changing the pensions system requires the same level of attention at the highest political levels as the other major issues such as health care, education, and transport.
Failing consumer confidence and increased risk are primary concerns not properly addressed by the FSA, the CA says.
Instead, the regulator is making these problems worse by reducing rather than increasing the level of regulatory protection of consumers, the CA adds.
It also accuses the FSA of pandering to to an industry lobby appealling for a lifting of price caps on "good products", such as stakeholder pensions.
The FSA's approach also increases the risk of mis-selling by advocating a reduction of responsibility attached to firms and advisers in ensuring the suitability of products for their clients, the CA says.
"The message is clear - consumer confidence has collapsed. The performance of the City of London and the insurance industry make a real difference to our standard of living and consumers have realised that the so-called experts are making a terrible job of it," says Mick McAteer, CA senior policy adviser and author of the report.
"Consumers must take greater responsibility for funding a decent retirement, but they will only do it if they have confidence in the system and they believe it is worth investing in pensions. There is a real opportunity for the government to make a difference, but unless it recognises the role it has to play and the limitations of the market to deliver, we will not see the creation of a fair, sustainable and secure pensions system."
The association says that there is a better way to solve the pension crisis, arguing that collective value-for-money pensions, and consumer focused financial advice should be the foundation for future pensions policy.
However, it does not play down the market's significant role, but says the terms of this role must be redefined so that the market works in the interests of consumers.
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