Check one pension detail today after FCA issues new warning

The Financial Conduct Authority (FCA) said some people trapped in older, or “legacy”, pension products are being left worse off because of outdated charging structures and ageing systems.

The warning affects unit-linked non-workplace pensions and savings products, which hold more than £1 trillion of customers’ money.

Why are older pensions under scrutiny?

The regulator reviewed how pension firms are treating customers under its Consumer Duty rules, which require financial companies to deliver fair value.

While the FCA found many pension products offer good value, it said some customers with older pensions are still paying more than people who have newer versions of similar products.

The watchdog said this can happen because of:

• Older charging structures with multiple fees
• Legacy pension products that have never been updated
• Outdated IT systems that make it harder for firms to monitor whether customers are receiving fair value

What the FCA wants pension firms to do

The regulator says pension providers should actively identify customers receiving poor value and take action to improve their deals.

Some firms are already:

• Reducing or capping charges on older pension plans
• Moving customers into better-value products
• Comparing outcomes between older and newer customers to ensure they are being treated fairly

The FCA wants these approaches to become standard across the industry.

‘Consumers should not be left behind’

Charlotte Clark, the FCA’s director of cross-cutting policy and strategy, said:

“Consumers in older products should not be left behind, and the good news is that some firms are already showing it doesn’t have to be this way.

“We want to see that progress reflected right across the market.”

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What should pension savers do?

If you have a pension that was opened many years ago and have never reviewed it, experts generally recommend checking:

• How much you’re paying in annual charges
• Whether your pension is still suitable for your needs
• Whether a newer version of the same product offers lower fees or better investment options
• If your provider can explain the value you’re receiving

The FCA says firms should be able to demonstrate that customers in older pension products receive fair value, rather than leaving long-standing savers paying more simply because they have remained loyal.