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’.”