FCA Announces Further DB Transfer Action.
Seen at Andrew Collins 20 June 2019.
The FCA yesterday published results of the data it has received from firms carrying out DB transfers and set out the next steps in its supervisory work related to transfers.<.p>
To put it simply, the Authority says that advice it is reviewing is still not of an acceptable standard. There is concern that firms are recommending that large numbers of consumers transfer out of their defined benefit pension schemes, despite that FCA’s stance that transfers are likely to be unsuitable for most clients.
Megan Butler, Executive Director of Supervision, Wholesale and Specialists at the FCA said:
"We have said repeatedly that, when advising on DB transfers, advisers should start from the position that a transfer is not suitable. It is deeply concerning and disappointing to see that transfers are still being recommended at the levels we have seen.
"Deciding whether to transfer out of a DB scheme is one of the most complex financial decisions a consumer may have to make, and it is vital customers get high quality advice. Our ambition is for pension transfer advice to reach the same standard as that of the rest of the financial advice market."
The FCA surveyed 3,015 firms and found that between April 2015 and September 2018:
- 2,426 firms had provided advice on transferring DB pensions
- 234,951 scheme members had received advice on transferring
- Of those, 162,047 members had been recommended to transfer out and 72,904 had been recommended not to transfer
- The total value of DB pensions where transfer advice had been provided was £82.8bn with an average value of £352,303
- 1,454 firms had recommended 75% or more of their clients to transfer. One reason a firm may be recommending a large number of clients to transfer is if the firm has a robust initial guidance service triaging clients. 1,346 firms reported data on the total number of clients who had not proceeded past the firm’s initial guidance. The total number of clients reported as not proceeding to advice was 59,086. When these triaged clients are factored in 55% of clients were recommended not to transfer.