Financial Conduct Authority (FCA) chief executive Andrew Bailey has told investment managers they are facing more government scrutiny than ever before because of the pension freedom reforms.
Speaking at the Investment Association dinner at Mansion House last night, Bailey said the pension freedoms were logical given increasing life expectancies but said this creates some serious issues for the government.
‘Because with the added issues of greater longevity and an ageing population, more freedom in working lives and retirement decisions is entirely sensible. But it does create some very big public policy challenges,’ he said.
Pension freedoms have seen a shift away from the sales of life insurance products, such as annuities, to investment management, which Bailey said, means asset management is more important than ever politically.
‘I would draw two major conclusions from these changes. First, the changes and the challenges are fundamental to society, and thus they inevitably engage public policy. In a way, they pitch investment management into the world of public policy far more than before. And, therefore, second, when you see the things that governments do, and we as regulators do, it’s worth remembering that there is a reason why we are showing so much more interest,’ he said.
This increased interest has been shown by the FCA’s Asset Management Market Study which proposed increased transparency and fee changes to the market.
This work was also supported by politicians with Labour recently saying asset management charges are a ‘scandal’.
Before the end of the year the FCA will publish new pension strategy.