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Carl Lamb: No excuses for sloppy DB transfer systems

Along with all the other firms that provide advice on defined benefit transfers, we received our questionnaire from the FCA about the quantity and nature of cases we have handled since 2015. By the time you read this, the deadline for its return will have passed and those under scrutiny will have breathed a collective sigh of relief that the work has been done.

But my question for all those involved is this: just how robust are your systems and how accessible was the data requested by the regulator?

This exercise will have tested many systems to their limits. Thankfully, we have invested much time and effort into ensuring our database is fit for purpose, and we have the functionality to extract the information required. I suspect this was not the case for many.

I wonder how many people had to burn the midnight oil, opening file after file to put the responses together? Or, worse, completed them on the basis of guesswork? We were given just a couple of weeks to extract and report the data requested.

The questions focused on areas like the provision of triage services, checking processes, the use of unauthorised introducers, investment advice at the time of transfer, ongoing costs to the client, and advice on other pension scheme transfers where safeguarded benefits were put at risk.

These are valid concerns and many of us have been worried about how transfer advice is being delivered and by whom. We have been particularly concerned where it has been broken into separate elements delivered by different firms, with the opportunity for one to blame another if the outcome is deemed unsuitable later.

My view is that it should be a single process delivered by an authorised advice firm, with a commitment to ongoing service to manage investment outcomes.

Today’s advice firm has responsibilities that would have terrified our predecessors – but this is for the good of everyone.

No one should be able to eschew responsibility for the advice given or fudge evidence helped by vague, woolly record-keeping. We should be able to stand by our advice and prove we had clients’ best interests at heart.

Those of us with tight procedures and good data processing must not be tarred with the same brush as those whose attitude is much more cavalier. I hope the regulator understands the majority of firms deal with DB transfer requests carefully, with client outcomes clearly defined and ongoing advice arrangements in place to ensure objectives can be met.

DB transfer complaint figures recently revealed by the Financial Ombudsman Service show clients are broadly happy with the advice delivered, with a significant share of complaints focused on delays and administration issues, rather than suitability of advice.

Of course, most transfers were carried out relatively recently, so it may be some time before we can realistically analyse long-term satisfaction numbers.

Good internal systems are not a necessary evil forced upon us by the need to report to the FCA, but are integral to the provision of good advice, the maintenance of good client relationships and the sustainability of a firm. They make us better at what we do and they allow those at the helm to analyse activity, identify pinch-points and manage risks to the firm. There is no excuse for sloppy data and processes.

Carl Lamb is managing director of Almary Green


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There are 3 comments at the moment, we would love to hear your opinion too.

  1. Careful now…what about retrospective views on what a good file looks like.
    I found the recent FCA feedback very useful but did anyone notice the hint of retrospection?
    Claims Chasers must be licking their lips.
    Cash Flow now at retirement at life expectancy beyond life expectancy.
    Challenging the objectives and robustly discounting them against everything.
    Challenging the spouse ..can the poor dear cope if hubby passes away with managing the Pension and what about the costs.

    I cant see this anywhere expressly written in the past, it all gleaming new standards.

    Great for the now.

    But don’t apply these standards to 2015 or we will have a problem.

    The Regulator will say these standards have always been here hidden in the plain sight of COB rules and all of their subjectivity… oh dear here we go again

  2. It wasn’t really that hard an exercise although I agree with a lot of the points you make. As our PI Insurance renewal papers coincided with the FCA data request we found there was a fair bit of crossover although unsurprisingly the former was asking for more/different data than the latter

    It was also interesting to compare the figures for those clients where advice was not to transfer against those for whom the advice was positive to transfer

    We got the impression (rightly or wrongly) that the regulator was probing for high levels of DB to SIPP transfers and where introductions were from unauthorised introducers (if they weren’t they should have been!)

    It may not have been the FCA intention to find out much about systems and processes for DB advice at this stage (no questions for example about the relationship between DB advice and full financial planning) perhaps that will come later?

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