A review of the six cohorts that have taken part in the FCA’s regulatory sandbox programme – which seeks to test innovative products, services, business models and delivery mechanisms - found that only 2 out of the 140 companies were focused on new approaches to retirement planning or later life finances.
Commenting on the findings, Mr. Lindsay said: “The findings of our analysis didn’t come as a surprise. The promise of freedom and choice is over five years old but in that time we’ve seen little product innovation in the market. The reality is that, whilst savers may have more flexibility than they did before 2015, many are still being funnelled into a limited range of options that aren’t tailored to the needs of a modern retiree.”
According to free2, this is clearly illustrated by the DB transfer market where the perceived inflated transfer values is currently spiking activity ahead of more stringent regulations coming into place later this year.
Mr Lindsay added: “For many, DB transfers are a false economy and they will end up worse off as a result. The demand in the market, however, shows that savers put a premium on flexibility and having access to capital in the early stages of retirement when expenditure is typically much higher than in late retirement. That the DB transfer route has been the only option for many is a sad indictment of the suite of products currently available to retirees.”
Mr. Lindsay concluded: “One of the main issues facing retirees is a historic lack of product innovation. Savers, advisors, policy-makers and financial services companies all have a role to play in addressing this situation. No two individuals are the same and, as such, we need a diverse range of tools to support people through retirement. Savers shouldn't be forced into binary outcomes - we all have a responsibility to make freedom and choice a reality.”
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