The regulator wants to work with the industry on products to allow people to unlock money tied up in their property, Financial Conduct Authority (FCA) acting chief executive Tracey McDermott has said.
Speaking at a Treasury Select Committee hearing, McDermott praised financial services for its handling of pension freedoms, enacted in April just a year after they were announced by the government.
But she said the sector needs to consider if it is providing “the right sort of products at the right stage” of consumers lives.
This could mean products that allow people to access the value in their property, she said, but admitted equity release products have “an unfortunate history”.
“We’re watching the market. There has been little by the way of new products coming onto the market. We’re not worried by that. We’d rather that than they rush,” McDermott told MPs.
“The industry has responded well to pension freedoms. But there is a situation particular to UK…is that people have a lot of money tied up in their home. Are there products that people can use to use the value tied up in their property?
“Equity release has an unfortunate history. We have to work closely [with the industry on this]. We do need to think about whether the financial services industry is providing the right sort of products at the right stage of life,” she said.’
Reasonable’ exit fees
McDermott was also grilled by MPs on exit fees charged by some product providers on retirees’ pensions, which is also the subject of a government consultation.
She said there are around 250,000 contracts where the fee is above 2%, which is deemed to be high.
“The government is looking into it with a consultation and we’ll be looking at the results of that,” she said, adding that the FCA is “keen to ensure fees charged are reasonable”.
“It is difficult to say what is reasonable, but we’ll be looking at the charging structure. It could be a small amount but over a long period of time [that adds up],” she said.