The FCA’s proposal to ban contingent charging will increase the advice gap, advisers say.
Research conducted by Aegon and consultancy Opinium sheds light on what advisers think of the watchdog’s proposals.
The decision to put forward a ban for consultation marked a change of direction for the regulator, which had decided not to tighten the rules on contingent charging in October last year.
It intends for a ban to apply “unless consumers have specific circumstances that mean a transfer is likely to be in their best interests”.
These specific circumstances are financial stress or ill health that can be used as legitimate reasons to charge on a contingent basis.
Aegon’s survey shows half of advisers who advise DB members are concerned that a complete ban on contingent charging would lead to a fall in demand for advice.
Only 21 per cent are confident a ban would not result in demand falling while 58 per cent say the lack of a triage facility is harming the market.
Aegon pensions director Steven Cameron says: “The FCA has recognised the difficulty some individuals will face if they have to pay for advice upfront and we welcome the proposed carve-outs for those with specific life shortening conditions or with significant financial difficulties.
“But this will only help a small minority. For others, the key may be to make the new form of ‘abridged advice’ workable.”
He adds: “Firms may offer this short form of advice and while it can only produce a recommendation not to transfer, it may help weed out those for whom transferring is unlikely to be suitable, saving them money and freeing up adviser time to spend on providing full advice to those more likely to benefit from transferring.
“We are keen to work with adviser firms to explore this approach including how to make it as streamlined and cost-effective as possible.”