A thematic review assessing the advice consumers are receiving on meeting their income needs in retirement has been announced by the Financial Conduct Authority (FCA).

The FCA stated that the review is a piece of discovery work to explore how financial adviser firms are delivering retirement income advice, and to assess the quality of outcomes consumers are getting.

This review was prompted, according to the FCA, by the introduction of the government’s pension freedom reforms which has changed the way consumers access their retirement savings.

Given the wider range of retirement options available, it is vital that consumers get good advice at the point they first access their pensions savings and, where relevant, on an ongoing basis, the authority went on to explain.

The FCA clarified that, since 2015, there has been a “significant” shift to consumers drawing an income from pension funds which remain invested.

"Advice in this area can be complex, so it is important firms understand the needs of their consumers and ensure their advisory solutions deliver consistently suitable advice," it stated.

The FCA had previously planned work on this topic in the past, known as 'Assessing Suitability Review 2', but this was paused to allow resource to be concentrated on the authority’s response to Covid-19.

This new thematic review will, according to the FCA, examine how the retirement income advice market is functioning whilst also focusing on how firms are responding to changing consumer needs as a result of the rising cost-of-living.

The FCA also revealed plans to link this work with the lifetime mortgages work oultined in its 2022/23 Business Plan, to get a clearer understanding of outcomes for consumers in later life.

The FCA aims to use the findings to help inform future strategy for the sector, with the results expected to be an "important indicator" of how firms are implementing the consumer duty.

The review is scheduled to begin some time in Q1 2023 with an aim to publish a report setting out the findings in Q4 2023.

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