The Advice Guidance Boundary Review is considering the role of digital and automated channels in order for consumers to access support with pensions planning, according to FCA CEO Nikhil Rathi.
Pension providers must also overcome their fear of being too close to the advice boundary and manage risk rather than eliminate it, Mr Rathi added in his speech to the JP Morgan Pensions and Savings Symposium this morning.
He said the FCA was “open-minded” as to how digitalisation can help close the advice gap.
Mr Rathi also said that consumers must accept that an investment carries risk but the market must make it clear that receiving no support at all carries greater risk.
Over half (54%) of all pension pots accessed for the first time were accessed without advice or guidance, according to figures from the regulator.
The regulator added that a third (34%) of over-45s with DC funds to not understand their accumulation options.
The FCA and the Treasury launched the Advice Guidance Boundary Review last year in an attempt to encourage the development of regulated and commercially viable guidance services to help close the financial advice gap.
Mr Rathi said: “However well pension schemes are invested, when retirement approaches, consumers have to choose how to turn their savings into income.
“Almost a decade after pension freedoms, those decisions become harder. Those retiring today may still have a steady income from a DB scheme, supplemented by a DC pot. Over time, more people approaching retirement will only have a DC pot on which to rely.
“The DC system expects consumers to take greater personal responsibility. Pensions is however a market marked by inertia, a lack of consumer understanding and ridden by fear.
“Most people never switch funds, many do not take timely advice in the years or decades before retirement, and half admit to being totally disengaged when it comes to pensions.”
He added that we are currently in a “window of opportunity” to develop a pensions framework fit for the future.
A separate report this morning from Hargreaves Lansdown found that the pension gender gap continues to grow.
Women on average contributed £5,599 to their HL SIPP so far this tax year, 29% lower than the £7,906 average for men.
This was despite 60% of women contributing to their SIPP in comparison to 58% of men.
