IFAs must review their clients and speak to those who will be affected by A-Day, according to the FSA.
Sarah Wilson, FSA director of retail markets, says: “It is clear that much work is going on in many firms but, with just six months to go, both firms and advisers now urgently need to start planning for the changes if they have not already done so.”
In particular, IFAs must ensure their systems and controls, including IT and other legacy systems, are updated to cope with the changes.
Wilson says IFAs “need to make sure that the information provided to their customers – including in pension projections and benefit statements – is accurate and sent with no undue delay, to avoid any potential consumer detriment in the lead up to A-Day”. p>
She points out the specific changes A-Day will have in relation to customers, adding:
“Changes to the options available at retirement and to the regulations on release of tax-free sums mean that some of your customers currently near to retirement may wish to defer until after A-Day”.
Furthermore, changes to the minimum age for drawing a pension ,which come into effect in 2010, mean some customers currently planning to retire early need to re-consider the best year in which to do this.
When asked whether IFAs need to review all their clients, the FSA repsonse was advisers should speak to those clients who will be affected. "If they are all affected then, yes, they should speak to all of them," a spokeswoman adds.
IFAs should have a process in place to identify which clients will be affected and make sure those clients are aware of their options, adds the FSA.
Alisdair Buchannan, head of communications at Scottish Life, agrees “any IFAs who have clients approaching retirement should make them aware of the changes".
He points out if IFAs start the process early enough and are well-organised they should not have any problems, but if they choose to leave it until close to A-Day it will be more difficult.
Buchannan says IFAs should have “contacted their clients and made them aware of A-Day and that the advisers are there to help them”.
He says this will protect against clients being poached by other firms.
And he advises IFAs to do a sweep of their database, find clients who may be affected, print out their details and look at their circumstances.
"It is not necessary to look at all the clients so IFAs should break down their clients into relevant groups, for example, people who will retire in two to three years," adds Buchannan.
There will be two future regulatory changes associated with A-Day which IFAs need to be aware of.
Wilson has also annouced FSA plans to consult in October on a proposal which – subject to some additional protections – would allow advisers who are only authorised to sell insurance products to also sell pension term assurance.
The government is also expected to consult on proposals to introduce an additional regulated activity for personal pensions, meaning the FSA could be regulating the sale of self-invested personal pensions from April 2007, says Wilson.
Wilson also refers to the changes brought on by depolarisation saying: “On disclosure, it is important that firms not only provide the right information (including, for example, comparative information about market commission levels), but do so at the right time (earlier in the advice process than they have typically done).”
In particular, prescribed text needs to be used correctly, documents must be stand-alone and “commission levels need to be disclosed in a comparable way, remembering to include the firm’s maximum and the market average,” Wilson adds.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Emily Perryman on 020 7968 4554 or email [email protected].IFAonline
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