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DB transfer triage in spotlight as Royal London calls for adviser ‘safe harbour’

Advisers should be allowed a “safe harbour” to give clients an initial view on defined benefit transfers without putting themselves at regulatory risk, according to Royal London.

The call comes on the back of a survey conducted by the provider that shows a significant variation in how advisers approach early conversations with clients, what steers they give them and when they cross the regulatory advice threshold.

In a consultation on DB transfer advice earlier this year, the FCA noted that all personalised recommendations would fall within the remit of regulated advice, and that triage should provide “generic, balanced information” in an “educational process”.

The regulator encouraged advisers to explain the transfer process, how charges were calculated, and to keep a record of what triage they gave, but to stop short of pushing the client towards or away from transfer.

The consultation reads: “Even if a client tells a firm about their personal circumstances, if the firm wishes to avoid giving advice it should not comment at the triage stage on whether they should consider a transfer based on this information.”

DB transfers: A post-freedoms history

The Royal London survey shows that while more than two thirds of advice firms do triage potential transfer clients, some report no clients decided to transfer after the process, compared to more than 90 per cent who transferred post-triage at other firms.

While some firms were clear they did not look at personalised information, favouring “an informal chat about generic pros and cons” or “a quick educational conversation”, others said they conducted processes like transfer value analyses, cashflow modelling, and attitude to risk assessment as part of a “full interview” at triage.

Other advisers said clients were “thoroughly grilled” on why they wanted to transfer, and showed an apparent presumption against transfer in their triage process.

One said: “If they are cautious, it’s a definite no.”

Royal London policy director Steve Webb says: “Our survey revealed a huge variation in adviser practice, with some advisers having a very general initial conversation with clients and others doing extensive personalised analysis, whilst still seeing this as part of a triage process, so it is understandable that the FCA is looking to provide greater clarity and standardisation in this area.

“For some clients it is clearly not going to be in their interests to spend a large amount of money only to be told that transferring is not a good idea.  The FCA needs to provide a ‘safe harbour’ for advisers which would allow them to have such a conversation with a client at an early stage, without putting themselves at regulatory or legal risk”.


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There is one comment at the moment, we would love to hear your opinion too.

  1. Sounds to me like “advisers” are going into a “triage process” with pre-conceptions and are pushing clients in the direction of their pre-concieved ideas, rather than what may or may not be in that specific clients best interests.

    Sounds to me like almost the exact opposite of the guidance given by the FCA..

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