FSA includes GPPs in consumer protection rules

The Financial Services Authority (FSA) will now include members of group personal pensions (GPPs) in its rules protecting people in workplace schemes from poor advice.

The regulator proposed last year to include GPP advice within its consumer protection rules.

In today's handbook update, the FSA has confirmed people who are automatically enrolled into a GPP will be entitled to the same protection from poor advice as those who are part of a workplace pension scheme from 1 October 2012.

Earlier rules said advisers must consider arrangements within existing workplace schemes before recommending alternatives, but this requirement did not cover GPPs.

The update comes as firms prepare for auto-enrolment, due to begin in 2012.

This revision of the rules also makes clear auto-enrolling employees in GPPs will not breach the distance marketing directive (DMD) ban on inertia selling.

Sheila Nicoll, the FSA's director of conduct policy, said: "With the introduction of automatic enrolment and the National Employment Savings Trust, the pension landscape is going to change significantly.

"We believe most people will be better off remaining in, or joining, an existing workplace scheme where they will receive employer contributions.

"The potential consumer detriment resulting from poor advice in this area is substantial as employees may lose all employer contributions for the lifetime of their pension savings."