The watchdog has confirmed pension providers are not responsible for the suitability of advice on defined benefit transfers Money Marketing can confirm.
A letter the watchdog sent to product providers last week about their DB transfer procedures inspired a number of conflicting interpretations.
In a Dear CEO letter sent to the heads of major providers, the FCA lays out how providers should treat customers fairly in the context of DB to defined contribution transfers.
It explained the watchdog has now completed its review of pension product providers and identified the key drivers of harm in the market.
The letter went on to say what product providers need to consider when designing, marketing and providing pension products.
In response to the letter Sipp provider Intelligent Money announced it was pulling out of the market and it would no longer accept DB transfers.
A number of other product providers said they are not pulling out of the market but have raised concerns about the implications of the letter and want further clarity from the FCA about it.
Now an FCA spokesperson says: “We do not expect pension providers to be responsible for the suitability of advice provided to consumers by advisers, but we do expect them to understand the underlying drivers to form an assessment on whether harms are being caused to their consumers. This is in line with our existing rules and published guidance.”
On background the regulator also points to its 2013 guidance to Sipp operators FG13/8 and adds: “The Dear Ceo letter reflects what we have learned from our review of pension product providers and is an area of high priority for the FCA because of the potential harm to consumers.
“We wanted to share our feedback with the sector as soon as possible and continue to engage with product providers where relevant.”