Pension firms must improve value for older products
The Financial Conduct Authority (FCA) found that customers in older, closed pension products receive poorer value. The regulator calls on all pension providers to adopt identified good practices to improve customer outcomes.
Legacy products fall short
The Financial Conduct Authority (FCA) has found that customers holding older, closed pension products are often receiving poorer value than those in newer offerings.
The multi-firm review identified complex charging structures, outdated product designs, and firms' data weaknesses as primary reasons for this disparity.
While some providers have begun simplifying or rationalizing their legacy products, capping charges, or moving customers to better-value alternatives, these good practices are not widespread.
The FCA is now calling on all pension providers to review its report and adopt these identified good practices.
The regulator is also engaging with firms to understand and address the barriers they face in improving value, especially within closed books of business, to ensure all pension savers receive fair value.
Clark urges market-wide progress
Charlotte Clark, director of cross-cutting policy and strategy at the FCA, emphasized the need for progress: 'Consumers in older products should not be left behind... We want to see that progress reflected right across the market.'
This work is a priority under the FCA's Pensions Regulatory Priorities and forms part of its broader efforts to modernize pensions and long-term savings.
It also supports wider reforms, including targeted support and pensions dashboards, designed to help consumers maximize their pension benefits.
The FCA recently launched proposals for the self-invested personal pension (SIPP) market (CP26/20), with the consultation closing on August 24, 2026, indicating ongoing regulatory engagement across the sector.
Inertia's hidden cost
This report highlights a persistent challenge in the pensions sector: inertia.
While the FCA identifies good practices, the underlying issue is a lack of proactive engagement by many firms with their legacy customers.
The call for market-wide adoption of best practices is crucial, yet the effectiveness will hinge on the FCA's enforcement and firms' willingness to prioritize long-term customer value over short-term profit from dormant accounts.