The Financial Conduct Authority (FCA) has confirmed that the implementation of new default investment pathways will be delayed by 6 months as a result of the Covid-19 pandemic.
The regulator has also announced delays to the introduction of more stringent rules for UK pension transfer specialists, which have now been postponed until October 2021.
Stating its support for firms’ reprioritisation amid the Covid-19 pandemic, the regulator argued that dedicating resources to deal with “critical functions” may outweigh any harm caused by delaying the implementation of certain policies.
The default investment pathways, which were designed to support consumers entering into drawdown without advice with their investment choices, were expected to be introduced on 1 August 2020.
However, it was argued that shortcomings in the pathways had been exposed by the market volatility caused by the current pandemic.
The regulator confirmed earlier this month that while the pathway rules were “already made”, they had been passed to the board for consideration for a delay considering the current crisis.
As a result, the implementation for the pathways is now expected in February 2021.
Meanwhile rules around pension transfer qualifications that were scheduled to be introduced on 1 October 2020 will be pushed back by a full year, until 1 October 2021.
The change in rules would see an increase in the standards advisers need to meet in order to advise on UK pension transfers, conversions or opt-outs, with all UK pension transfer specialists required to hold the Level 4 qualification for providing advice on investments, as defined in the Retail Distribution Review.
The regulator stated: “The FCA supports firms’ reprioritisation to focus on preventing and mitigating consumer harm during the coronavirus pandemic.
“We believe that the benefit to consumers from firms dedicating resources to dealing with critical functions in the short term may outweigh the harm from delaying the implementation of certain polices.
“We are also aware that most accredited bodies and other professional qualification providers are postponing their exams due to the coronavirus crisis.
“The FCA board have made new rules which delays the UK pensions transfer specialist qualification rules in this policy statement until 1 October 2021.”
The FCA has today also published its 2020/21 Business Plan, arguing that pension freedoms had led to a “significant risk of harm” to UK pension investors and launching a consultation on a potential consumer information campaign.
The business plan emphasised the impact of the coronavirus on forward-looking planning, stating that it ongoing initiatives would continue where possible, but clarifying that it may be months before the FCA is in a stable position and able to focus fully on normal activities.