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British Steel IFA: Many advisers ‘misinterpret’ FCA transfer rules

A British Steel IFA who has had their transfer permissions reinstated says many advisers have “misinterpreted” the FCA’s regulations on the subject.

In February, County Capital Wealth Management, which trades as The Pensions Review Service, became one of the 10 firms that voluntarily agreed to stop doing transfer work with the watchdog.

It regained permission to do transfer work last Friday after being reviewed by the FCA for six months and having to prove it understands how the FCA’s new rules for transfers should be applied.

These rules, such as the requirement that a transfer be the result of a personal recommendation, are in the policy statement and consultation on pension transfer advice published at the end of March.

During the FCA review of County Capital Wealth Management its managing director Mark Abley says the firm spoke to other firms and technical consultants to gauge their understanding of the new rules.

However, he says it became apparent some advisers and technical consultants do not have a firm grasp of how the regulations should be applied.

Abley says the recent policy statement concluded there should be an appropriate analysis of the client’s options, which he says has led people to misinterpreting the FCA’s rules.

He argues some have misunderstood the FCA’s distinction between the analysis stage as compared to the suitability part of a transfer.

While a pension transfer specialist should consider the options available to the client in the analysis stage, the client should not be presented with a menu of options in the final recommendation.

Abley says: “The suitability letter should be clear and outline specifically what the pension transfer specialist recommends and how it meets the client’s objectives.

“Other documents like options tables and ‘what we know about you’ are important and can be added to the appendix but the recommendation itself must be clear and unambiguous.”

He adds: “The FCA is clear that it is the duty of the adviser to apply the regulations correctly and be responsible for the advice it gives. The FCA will not accept the line ‘this is what our compliance consultant told us’.”


Justin Cash, Editor of Money Marketing

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There are 7 comments at the moment, we would love to hear your opinion too.

  1. This is shocking! Is this guy really saying that he was not aware that he had to make a recommendation to the client?

    As for the comment that an IFA might think that he’s avoiding personal responsibility and is protected if a Compliance Consultant says it’s OK – anyone taking that position deserves to have the book thrown at them!

  2. This is correct. The adviser must consider the client’s circumstances and objectives (and risk profile etc) and make a recommendation and should consider alternative ways of meeting the client’s objectives (without transferring).

    Are some advisers presenting a range of options for the client to choose, just highlighting and the pros and cons and not making a recommendation? Is anyone really doing this? If so, you need to stop as is not compliant.

  3. You have Rory found out why Suitability Letters are so long. A personal recommendation may require three basic things in the SL but all the other factors such as alternative solutions and their pros and cons need documenting and repeating back to the client in the Suitability Letter. This does not just apply to DB Transfers but to many other financial advice cases. So let’s have less about the length of SL and a better understanding and appreciation of what goes on before the actual letter is written.

  4. Is this chap serious?

    In other news, the earth is round.

  5. Andrew Alexander 16th August 2018 at 4:53 pm

    No smoke without fire…

  6. I cannot believe this guy is deemed fit and proper if he doesn’t even understand the fundamental premise of what regulated advice is

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