View more on these topics

Advisers braced for further FCA action on DB transfers


Advisers and providers are prepared for further regulatory scrutiny of defined benefit pension transfers after the FCA issued a warning notice related to 500 transfers worth £12.7m.

Last week the FCA published a warning notice against an individual after their firms advised more than 700 DB scheme members about the merits of transferring to a defined contribution pension.

As part of enhanced transfer value exercises, 500 of the DB members decided to transfer to a DC scheme, with a total of £12.7m moved.

However, the regulator says many of these members were at “serious risk of receiving unsuitable advice”.

Combined Financial Strategies chartered financial planner Jonothan McColgan says the messaging from the FCA that transfers are risky means further issues in this area are likely.

McColgan says: “When you look at things properly and you see what the FCA is saying about transfers, for anyone doing this properly it makes sense and is how you should be doing it already. So you start thinking: ‘Why are they telling me that? It is like teaching me to suck eggs.’ But it must be because there are a large number that are not doing it [properly].”

He adds: “It is making an area of advice very difficult and expensive for advisers, to jump through the hoops that are being put in place to protect people from being taken advantage of.”

Aberdeen Asset Management retirement savings head Gregg McClymont says: “On the one hand, when the Government introduced the freedom and choice agenda it explicitly stated that ‘It is your money’; and, on the other hand, clearly the regulator is understandably extremely keen to make sure transfers are in the interests of members. So it has a tough job in that respect.”

The FCA did not name the individual it had warned but says they had compliance oversight controlled functions at two authorised firms.

The regulator says in its warning notice: “The FCA considers that, between 1 February 2006 and 30 April 2009, the individual breached principle 6 of the FCA’s statement of principles for approved persons by failing to use due skill, care and diligence in carrying out the compliance oversight function.”

Specifically, the regulator said the individual failed to make sure the firms’ ETV advice process met its regulatory requirements.

According to the FCA, the indi-vidual failed to “identify obvious flaws in the ETV advice process which he should have identified either from his own review of the process or from the limited file reviews that he undertook.”

The individual also “failed to give any or sufficient consideration to the compliance of the ETV adv-ice process and of the advice given in his interactions with the pension advisers.”

The regulator also raised conflict of interest concerns. It said the individual did not identify or manage potential conflicts over commission from the provider that DB members were transferred to, or over payments to a pension adviser based on how much ETV advice business they wrote.

The FCA concluded: “As a result of the individual’s failings, DB scheme members were at serious risk of receiving unsuitable advice.

“The FCA considers it likely a significant proportion of the app-roximately 500 members who transferred from a DB scheme to a DC scheme would have decided not to transfer had they received suitable advice.”

The FCA also expects to consult early this year on updating the pension transfer redress methodology.

The regulator is concerned that the way redress is calculated – which dates back to the Pensions Review in the 1990s – no longer puts consumers back in the position they would have been in if they had stayed in the DB scheme.



FCA launches pension transfer investigation into deVere

International advice firm deVere UK has agreed to stop providing pension transfer reports as the FCA launches an investigation into the firm. The FCA will conduct a so-called ‘skilled person review’ into the firm’s pension transfers after deVere entered a voluntary requirement with the regulator to “cease providing advice”. A spokesman for deVere says: “deVere UK wrote […]

FCA logo glass 3 620x430

FCA delays pension transfer advice complaints paper

The FCA has pushed back work to review how clients given unsuitable advice on pension transfers are compensated. The regulator said in August that it wanted change how redress is calculated for unsuitable pension transfer advice as it believes the current system is flawed. It said it was planning to consult in “autumn 2016” on […]


The Govt’s IHT warning on pension transfers

A recent case has highlighted a controversial approach HM Revenue & Customs applies that can subject a member of a registered pension scheme to unexpected inheritance tax charges following a transfer. The situation can arise if the member transfers their benefits when they know their life expectancy is impaired and they die within the following two […]

Who cares?

By Tracey Dickson, marketing consultant There are almost 7 million carers in the UK – that’s around 10 per cent of the population who provide unpaid care for a disabled, seriously ill or older loved one.1 But according to a report from the charity Carers UK, 20 per cent of people providing 50 hours or more of care […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm