The Financial Services Consumer Panel (FSCP) is concerned about the ability of advisers to cope with the growing complexity of retirement income products.
Research commissioned by the Panel to find gaps in regulation suggests there is poor protection for older people who are decumulating their savings.
The report suggests advice on retirement income products should be subjected to higher standards than other products, due to the critical and often irreversible nature of advisers' recommendations.
It also calls for a less ‘fragmented' approach to financial advice for older people, where individual needs, family needs, state benefits, taxation and health and longevity concerns are all taken into account.
The report suggest the FSA may wish to examine whether advisers should be required to have additional, specialist qualifications to allow them to deal with later life financial needs.
Additional suitability requirements, including examination of attitude, ethical standards and psychological profile, might also be needed to ensure the right kind of adviser is seeing older clients.
The FSCP says those who already have a relationship with a financial adviser are less vulnerable as the reach retirement, but those who do not know where to go for advice and guidance are often at a loss leading to a poor understanding of the options available for decumulation.
Third way annuities are highlighted as being of particular concern, with the Panel questioning whether the products are clearly understood by both consumers and insurers.
The FSCP has been recommended to take on issues affecting older consumers as one of its major objectives, with decumulation and advice as its priorities for improving outcomes in the sector.
Adam Phillips, chairman of the Panel, says: "It is crucial that people who have worked hard to save for their retirement are able to get appropriate advice and buy financial products which are value for money to sustain them into old age.
"We will use the findings of this report to focus our work and to engage in constructive dialogue with the FSA and organisations working with people in later life."
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