GOOD things come in threes, goes the adage. So a trio of possible measures being introduced in 2018 should be a positive, if somewhat belated, step change in delivering an environment of greater consumer protection for pension savers.

While the pension freedoms regime will have been in operation for three years come April 2018, it is safe to say the regulatory environment has yet to fully catch up.

“I want as many people as possible to be able to access their pension flexibly,” stated then UK Chancellor George Osborne when announcing the freedoms back in 2014. It would certainly appear that many individuals have been keen to oblige.

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Official HMRC statistics show that over £14 billion has been flexibly accessed since the introduction of the regime, while it is estimated that £50bn has been transferred out of company defined benefit (DB) pension schemes.

But while the underlying principles of the freedoms should be applauded, many have argued that sufficient safety nets are not currently available to ensure people are able to make fully informed decisions and, in some ways, to save them from themselves. One of the main unanswered questions remains whether people are making withdrawals that are sustainable.

There has also been some recent criticism in the case of the British Steel Pension Scheme, where scheme members were faced with a limited time window to decide to move to a new scheme, rely on the Pension Protection Fund or transfer their benefits elsewhere. But, given the complexities of such a decision, and the crucial importance of seeking quality financial advice, demand simply outstripped supply in the local area.

This left too many people having to take a vital decision in the dark, putting them at risk of suffering irrevocable financial detriment resulting from a choice contrary to their best interests. Serious question marks were also raised about the quality of financial advice given to some members and the means by which the advisers were remunerated.

But 2018 offers some hope on the horizon.

In the first quarter of 2018, regulator the Financial Conduct Authority (FCA) is expected to confirm changes to the rules on advising on pension transfers. Greater certainty in this area should naturally increase confidence among advisers as to the regulator’s expectations for this type of advice.

The hope is that this can be the catalyst for some advisers to change their current perception that DB transfers are a minefield and just not worth any of the potential regulatory, financial or reputational risks they come with. Not until more advisers are comfortable giving advice on such transfers will there be some equilibrium between supply and demand.

Furthermore, in the new year it should also become clearer as to what the Government’s intentions are on how best to support pension savers who are either unable or unwilling to pay for financial advice. The Work and Pensions Select Committee has called on the Government to include a default guidance requirement through the Financial Guidance and Claims Bill.

This would require individuals to participate or expressly turn the down a Pension Wise guidance appointment, where free and impartial guidance about defined contribution pension choices is offered, before being granted access to their pension pot.

This measure is designed to promote shopping around, better-informed decision making and protection against scams. The problem with this is that people generally go through a two-stage process: they decide that they are going to access their pension pot, then they take action. Guidance needs to be provided at the initial decision-making stage, not when people are asking for their money.

Finally, a further element of consumer protection should be clarified during the second quarter of 2018 when the FCA finalises its review of the Financial Service Compensation Scheme (FSCS).

Currently, different FSCS compensation limits apply depending on the type of claim involved. However, the clear movement towards more consumers investing their pension funds in drawdown products in retirement rather than insurance-based annuities has a raised a potential issue, namely that more people are moving from an unlimited claim limit to a £50,000 claim limit should they have to rely on the UK’s statutory compensation scheme of last resort.

This has led the regulator to seek views on whether it should increase the compensation limit to £85,000, which according FCA analysis would result in 76 per cent of pension plans being fully covered by the increased compensation limit.

Time will tell whether these measures go far enough. But after a three-year period of regulatory inactivity, action should be commended.

Lee Halpin is technical manager at @sipp.